The government on Thursday approved to sell 26% or more shares of 31 state-owned entities including Pakistan International Airlines (PIA) and Pakistan Steel Mills, fulfilling a key condition of the International Monetary Fund under the $6.7 billion bailout programme.
The list was approved by Cabinet Committee on Privatisation (CCOP) three days after expiry of September 30 deadline set by the IMF. The deadline was given to provide a detailed plan for the respective entities with respect to turning around the loss-making firms.
The Privatisation Commission had tabled a list of 30 items but the CCOP, headed by federal finance minister Ishaq Dar, added Lakhra Power Plant at the eleventh hour. The privatisation of Lakhra Plant would be subject to approval of the Council of Common Interest, as the plant was not among the 65 entities that the CCI had earlier approved for privatisation and restructuring.
Last month, the Supreme Court of Pakistan had struck down the Lakhra Power Plant’s lease to M/s Associated Group for 20 years after finding faults in the lease agreement. The apex court had declared the lease as illegal and void and had directed the federal government to conduct an inquiry to fix civil and criminal liabilities on beneficiaries in accordance with law.
Among the approved 31 entities are PIA, PSM, Pakistan State Oil, Islamabad Electricity Supply Company and Gujrawanala Electricity Supply Company. The government has already announced to sell 26% stakes of the PIA to a strategic partner but the inclusion of the PSM was a surprising one.
Earlier, the government had announced to restructure the loss making entity instead of privatising it after the main opposition party in the National Assembly threatened to launch a country wide strike.
According to a Finance Ministry official, it was not necessary that the government will privatise all the 31 enterprises. He said that the approval was given for all of them and after Eid the Privatisation Committee will draw up a list comprising of half a dozen names among the 31 entities that could be privatised on a fast-track basis.
However, PIA has to be privatised by December 2014 as part of the IMF condition.
The future of employees and political backlash to the privatisation will be key determinants for reaching a decision of full or partial privatisation, the official said.
The CCOP directed the Privatisation Commission to ensure that the interests of employees are protected at all cost, according to a handout of the ministry of finance.
He said it was also not necessary that the government will sell only 26% shares. There was possibility that depending on the entity, the government may sell majority shares to the private parties where the strategic partners refuse to take management with minority shares.
The CCOP approved four-pronged plan for these entities that revolved around off loading shares in the stock market, handing over management control to the private sector, divestment and selling assets where necessary.
The government will off load shares of Oil and Gas Development Company Limited, Pakistan Petroleum Limited, Pakistan State Oil, Habib Bank Limited and Untied Bank Limited, as these entities were already registered in the stock markets.
The CCOP may decide either to handover management control of National Insurance Company Limited or issue Initial Public Offering (IPO) at stock market. Islamabad Electricity Supply Company and Gujrawanala Electricity Supply Company would be offered for for strategic partnerships.
Despite approval for privatisation, there was possibility that the PSM could be restructured given the opposition to its privatisation, the officials said.