PTI govt initiates process for sale of 770 acres of state land

Privatisation Commission board allows hiring of valuers for conducting due diligence


Shahbaz Rana April 10, 2019
Prime Minister Imran Khan is keen to sell state assets to pay off debt, which has been increasing at a double-digit pace due to sinking revenues and growing expenditure on defence and debt servicing. PHOTO: FILE

ISLAMABAD: The government on Tuesday approved the initiation of a process of hiring valuers for selling nearly 770 acres of its prime land to the private sector aimed at paying off the country’s growing public debt that stood at Rs27.6 trillion.

Headed by Minister for Privatisation Mohammad Mian Soomro, the board of Privatisation Commission allowed the government to hire valuers from the market for conducting due diligence of these properties.

In the first phase, the real estate of Pakistan Post, Ministry of Information and Broadcasting, Commerce Division, Water Resources Division, Pakistan Sports Board, Ministry of Housing and Works and Civil Aviation Authority will be sold.

The board also decided to serve a fresh notice on joint-venture partners of Mari Petroleum Company Limited for selling the government’s 18.39% stake in the blue-chip company. It approved the hiring of an AKD Securities-led consortium as financial advisers for the sale of SME Bank Limited.

A delay in offloading the government’s shares in Mari Petroleum has adverse implications for this year’s budget deficit. Finance Minister Asad Umar is keen to conclude the divestment before June.

Sale of state assets

“The Privatisation Commission board has approved the hiring of valuers through a competitive process for due diligence of the real-estate assets,” Ministry of Privatisation Secretary Rizwan Malik told The Express Tribune after the board meeting.

He said it was decided that the valuers would determine fair market prices and commercial prices of these properties aimed at maximising gains for the state.

Last month, the federal cabinet directed all the ministries to identify three properties each, free of all encumbrances and having clear documents, for their disposal. In response to that, 22 ministries identified 71 properties for sale.

PM Imran is keen to sell state assets to pay off debt, which has been increasing at a double-digit pace due to sinking revenues and growing expenditure on defence and debt servicing.

The premier has constituted an inter-ministerial committee to identify the state-owned assets for sale. The government has decided that in the first phase only 16 properties, measuring 768 acres, will be offered for sale, according to government sources.

Pakistan Post has identified three properties for sale which are located at Jhangi Syedan, (F-I5) Islamabad; Matore Wala, Kahuta, Rawalpindi district and Chora Sharif, Attock district.

The Ministry of Information has identified two properties for sale. These are commercial and agricultural land of a transmitting station located in Lahore and commercial land of a receiving centre in Karachi.

The commerce ministry has offered 97 acres of land of Trading Corporation of Pakistan (TCP) and Grain Godown in Karachi. Seventy-two acres of land of Grain Godown is the most expensive that even at deputy collector rates has been estimated at Rs4.4 billion. The ministry has also offered to sell two TCP shops located at Quaidabad, Karachi.

The Ministry of Housing and Works has offered 66 kanals of land in Islamabad, Peshawar and Lahore. The Water Resources Division has offered Wapda Rest House, Abbottabad for sale.

The inter-provincial coordination (IPC) ministry has offered Pakistan Sports Board’s 7,040 marlas of residential land in Narowal for sale. The Civil Aviation Authority has offered 80 acres in Muzaffargarh and four acres in Vehari district for sale.

Mari Petroleum

The board also decided to serve a fresh notice on joint-venture partners - Fauji Foundation and Oil and Gas Development Company (OGDC) - of Mari Petroleum.

Rizwan Malik said the board decided that unlike previous notice, this time the notice would also include the per-share price. The price will be determined keeping in mind the weighted average price, prevailing market rates and third-party verifications, said the secretary.

Fauji Foundation has 40% stake in Mari Petroleum, OGDC has 20% stake and the federal government has 18.39% shareholding which it has been trying to offload. The remaining 20% shares are listed at the Pakistan Stock Exchange (PSX) and are held by institutional investors and the general public.

In October last year, the Cabinet Committee on Privatisation (CCOP) approved the divestment of government’s remaining stake in Mari Petroleum.

The Petroleum Division in January had served transfer notice on the joint-venture partners. The Fauji Foundation and OGDC had the right to respond within 21 days of getting the transfer notice ie latest by February 13, 2019.

However, the joint-venture partners did not adhere to the prescribed procedure and timelines. Both the partners asked to first share reference price for the sale of shares.

The Privatisation Commission was of the view that due to the observations made by the joint-venture partners, the transfer notice stands cancelled and is required to be reinitiated.

In January 2017, the then government had decided to give a 7.5% discount over the closing share price of Mari Petroleum as of January 27, 2017, which translated into Rs1,297 per share.

PTI govt to consider strategic partner for PSM revival

If both the joint-venture partners do not exercise their right to acquire the offered shares in Mari Petroleum, the government will divest the shares via a secondary public offering at a price not less than the prices specified in the transfer notice.

SME Bank

The board also approved a consortium comprising AKD Securities (lead adviser), Grant Thornton Consulting Limited and RIAA Barker Gillette for selling the government’s stake in SME Bank.

'49 state-owned entities to be privatised in five years'

The consortium, led by AKD Securities, secured a maximum score of 96.45 due to the lowest fee of Rs23.7 million for undertaking the assignment.

New entries

The board also approved the removal of House Building Finance Company from the privatisation programme, but included State Engineering Corporation, Pakistan Automobile Corporation, National Fertiliser Corporation, Republic Motors (Private) Limited, Sindh Engineering (Private) Limited and Morafco Industries (Private) Limited in the privatisation list. 

Published in The Express Tribune, April 10th, 2019.

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