ISLAMABAD: After waiting for about 10 months for a response from the Sindh government, the Cabinet Committee on Privatisation (CCoP) will now decide whether to privatise Pakistan’s largest, but closed industrial unit or abandon its plan to sell Pakistan Steel Mills.
The CCoP, which is scheduled to meet on Thursday (today), will take up the issues of privatisation of the PSM and Pakistan International Airlines (PIA) as well, said Mohammad Zubair, chairman of the Privatisation Commission. He said the Sindh government did not give a formal response to the federal government’s proposal to acquire the industrial unit as of June 10 - the final deadline given to the provincial government.
The mill is closed since June last year despite the government having pumped in more than Rs25 billion of taxpayers’ money.
In October last year, the Finance Minister Ishaq Dar, in his capacity as chairperson of the CCoP, had decided to offer the entity to the Sindh government. That time, the Privatisation Commission had taken the transaction structure of the PSM for the CCoP’s approval.
But the CCoP declined the transaction structure after which Dar decided to offer the country’s largest industrial unit to the Sindh government on as-it-is-basis.
Govt's remaining stake in Kot Addu Power Company to be sold
However, the provincial government did not show interest in acquiring the entity, although the PPP-led Sindh government was opposed to its privatisation. The province wasted ten months on various pretexts. It had sought financial accounts of last five years of the steel mill, the proposed transaction structure, tax policy and details of any bailout packages the federal government intended to give to revive the entity before its sell-off.
PSM is on the active list of privatisation and the government had promised the International Monetary Fund (IMF) that the entity would be sold by March 2016. The federal government remained divided over the issue of privatisation of state assets and finally dropped the plan to privatise power distribution companies.
The decision on the PSM may again pitch the federal government against the opposition parties that are looking for any issue to create problems for the beleaguered government.
Zubair said that the Commission needed a fresh CCoP decision to move ahead on the PSM privatisation plan.
The CCoP will also take up the issue of selling minority stakes of the PIA without management control, in line with changed ground realities. Earlier, the government wanted to privatise the PIA along with the management control.
In April this year, the Parliament unanimously approved a bill to convert PIA into a public limited company.
The government had agreed to incorporate the opposition’s suggested major amendment that the management control of the PIA would continue to remain in the hands of the federal government and that it would not be able to divest more than 49% shares to any third party.
A new sub-clause 4 with an explanation added to Clause 4 of the bill that stated, “Representation on the Board of Directors and all other rights and privileges of shareholders of the company, or any of its subsidiary companies carrying on air transport business, shall be proportionate to their share-holding.”
The explanation attached to the sub-clause reads as “Management control of the company and any of its subsidiary companies in the above circumstances shall continue to vest in majority shareholders, which shall be the federal government and whose share shall not be less than 51%.
The CCoP will also take up the agenda of allowing the Privatisation Commission to offload the government’s remaining 40.25% stake in Kot Addu Power Company (Kapco) on the stock market aimed at paving the way for last round of talks with the IMF.
Under an agreement with the IMF, the government will give an advertisement by July 15, 2016 to invite Expressions of Interest from prospective bidders for selling its remaining 354.33 million or 40.25% shares through a capital market transaction.
Kapco has a power generation capacity of 1,600 megawatts and is a combined-cycle power plant. It is listed on the PSX with market capitalisation of over $750 million as of June 30 this year.
Published in The Express Tribune, July 14th, 2016.
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