ISLAMABAD: The federal cabinet has allowed selling of state land to pay off the government’s ballooning debt that has already crossed over Rs27 trillion. However, capacity constraints of the Ministry of Privatisation and rigorous regulations may slow down the sell-off process.
While chairing the federal cabinet meeting, Prime Minister Imran Khan directed to set up an Asset Management Cell at the Privatisation Commission aimed at fast-tracking the process to sell the real estate assets, according to the officials who attended the meeting.
It will be for the first time since its creation about 30 years ago that the Privatisation Commission will sell real estate that is owned by the federal government ministries and departments at a large scale.
It may be a risky venture, as valuation and assessment of government land and buildings would not be an easy task at a time when bureaucracy remains cautious due to the National Accountability Bureau (NAB).
The PM also directed that each ministry and division should send a list of at least three properties that are free and clear of all encumbrances to the Privatisation Commission to put them on sale, said the officials.
The decision to sell the state land has been taken to pay off the increasing public debt that stood at Rs27.1 trillion as of end of January. During the first half of this fiscal year, the federal government spent 36 per cent of its total budget on paying interest on domestic and foreign debt.
The plan faces obstacles in the shape of weak capacity of the Privatisation Commission, rigorous regulations that are aimed at ensuring transparency, and a dispute over the ownerships of properties between the federal and provincial governments.
However, the prime minister has instructed for the process to be fast-tracked and asked the Privatisation Commission to make it its top priority, according to a cabinet minister.
The commission had already written to the government departments to share the details of their vacant properties. As a result, it has received the details of more than 45,000 properties, according to the officials of the Privatisation Commission. However, the majority of these properties were disputed.
For instance, the Federal Board of Revenue owns more than 4,600 acres of land at a prime location in Karachi, however, except for 300 acres, the rest of the land is illegally occupied.
The secretary of the Ministry of Privatisation on Thursday gave a presentation to the federal cabinet on the way forward and the ministry’s capacity to handle such a gigantic task. The cabinet was informed that the ministry was ill-equipped to handle the job while requesting the appointment of new officers to run the Asset Management Cell, said the officials.
“The cabinet was briefed on the progress about the identification of state-owned assets by all ministries and divisions,” according to a handout that the PM’s Office issued after the cabinet meeting.
In one of the earlier meetings, PM Imran constituted an Assets Management Committee to oversee the sale process of the state land, the government officials told The Express Tribune. Interestingly, Privatisation Minister Mohammad Mian Soomro has not been made the chairman of the committee.
The committee, comprised of five ministers, lacks experience. Federal Minister for Maritime Affairs Ali Zaidi has been made the chairman of the committee. Its other members include Communication Minister Murad Saeed, Minister of State for Revenue Hammad Azhar, Minister of Kashmir Affairs Ali Amin Gandapur and Special Assistant to Prime Minister on Overseas Pakistanis Zulfi Bukhari.
Privatisation Secretary Rizwan Malik is also the secretary of the Assets Management Committee.
The sources said that initially, the Privatisation Ministry had refused to take the job and instead proposed that the government should set up a Land Development Authority through an Act of the Parliament. The proposal was opposed by the Ministry of Law, which opined that only the Privatisation Ministry has the mandate to sell state assets.
The Privatisation Ordinance mandates the commission to restructure and privatise state-owned enterprises. After coming into power, the Pakistan Tehreek-e-Insaf (PTI) government has deleted over 55 entities from the active list of privatisation, limiting it to only eight enterprises.
Although PM Imran desired that the state assets should be expeditiously sold, it would require at least six months to complete the first transaction even after relaxation of certain regulations, said officials. The Privatisation Commission would shortlist valuators from A Category list of pre-qualified valuators, maintained by the State Bank of Pakistan to save time, according to the Privatisation Commission officials.
The properties selected for the sale would then be valued by these valuators and their reference price will be approved by the board of the Privatisation Commission and the Cabinet Committee on Privatisation, they added.
However, this process is slightly different than the one defined in the Privatisation Ordinance and the regulations of the Privatisation Commission, which may raise transparency concerns.
“The Privatisation Commission is fully committed to implementing the PM’s vision in a transparent manner”, said Privatisation Secretary Rizwan Malik while talking to The Express Tribune. Malik said that the commission would utilise its full strength to implement the plan but agreed that his department was facing a shortage of manpower.
In September last year, the premier stated that thousands of acres of state land were lying vacant that can be used for productive purposes. “Just the urban land with buildings is worth over Rs300 billion”, PM Khan tweeted at that time.
He had suggested that this “dead capital” could be used for other purposes of public interest.