Claiming a lack of interest by the private sector, the Balochistan government says that its focus for its 2012 budget will be investing in the province’s natural resources, including copper and gold mining at Reko Diq, towards which it has allocated Rs20 billion over two years.
Flanked by Finance Secretary Dostain Jamaldini, Balochistan Finance Minister Mir Asim Kurd announced that the province plans to begin a big push towards utilising its own natural resources that includes buying significant stakes in the Sui Southern Gas Company (SSGC) and Pakistan Petroleum Ltd (PPL), both currently majority-owned by the federal government.
Addressing the post-budget press conference, the finance secretary handled nearly all of the technical questions, with the minister remaining quiet for much of the time.
The Balochistan government collects the smallest amount of revenues amongst any province, even when measured as a percentage of its own budget. Jamaldini sought to explain that by suggesting that the private sector in the province is miniscule, requiring the government to generate much of its revenue through its own investments. Nevertheless, the Balochistan government says it achieved 95% of its revenue targets in the first eleven months of the outgoing fiscal year.
“The main reason behind the small size of provincial receipts is the lack of a private sector in the province,” said Jamaldini. “The government relies on its own investment.”
The finance secretary then cited statistics to support his position, saying that 85% of the investment in the province last year was by public sector entities, with a relatively negligible contribution from the private sector.
For fiscal year 2012, Quetta has allocated Rs8.5 billion for its mineral investments, adding to the Rs12 billion it spent in the outgoing year. Jamaldini said that the provincial government was also planning on buying 25% of the shares of SSGC and PPL.
It is unclear how Balochistan plans on financing its acquisition. At Wednesday’s close of trading on the Karachi Stock Exchange, the two companies had a combined market capitalisation of about Rs275 billion.
To purchase a 25% share, assuming current prices hold, Balochistan would need to arrange for Rs68.8 billion, which is equal to 41% of the size of the 2012 provincial budget.
Published in The Express Tribune, June 23rd, 2011.
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