The CCoP was further told by the Privatisation Commission that the bidding process for the 27 properties was likely to be completed by the end of April 2020. PHOTO: APP
ISLAMABAD: The federal government on Tuesday approved the transaction structure for sale of 27 state-owned properties and set the minimum reserve price at Rs6.6 billion aimed at raising money to pay off the debts.
The Cabinet Committee on Privatisation (CCoP) has allowed open auction bidding for 27 land assets owned by the federal government entities in pursuance of a federal cabinet decision to dispose of unproductive state lands and assets, stated a handout issued by the Ministry of Finance after the meeting.
Adviser to the Prime Minister on Finance Dr Abdul Hafeez Shaikh chaired the CCoP meeting. Privatisation Secretary Rizwan Malik also gave a briefing on the status of the privatisation process of two LNG-fired power plants that the government wants to sell to raise non-tax revenues.
The Privatisation Commission (PC) Board had recommended the transaction structure for an open auction bidding and also suggested a reserve price of Rs6.62 billion for 27 properties belonging to different federal government divisions and entities. The CCoP was further told by the Privatisation Commission that the bidding process for the 27 properties was likely to be completed by the end of April 2020.
Prime Minister Imran Khan had directed to identify the unproductive land across the country and sell it to private parties to raise money to pay off the public debt. However, the money that the government expects from the transaction is hardly sufficient to meet the federal government’s expenditures for less than half a day.
The Pakistan Tehreek-e-Insaf (PTI) government has added Rs7.8 trillion in public debt in the last fiscal year at a rate of Rs21.4 billion per day.
The Rs6.6 billion minimum reserve price is inclusive of 35% private share in the most expensive property - the Republic Motors, Lahore, which has a minimum price tag of Rs5.03 billion. After excluding private parties’ share, the minimum money that the federal government will get from the 27 properties transaction will be Rs4.9 billion.
Republic Motors Limited, 65% of which is owned by the federal government, has currently more than 40 tenants on the premises, however, their lease agreements have expired. The court has authorised the Privatisation Commission to sell the property.
The transaction committee had recommended the PC Board to set a reserve price at Rs5.03 billion for the Republic Motors Property, which the CCoP approved.
The CCoP approved option auction of 17 properties of the Earthquake Reconstruction and Rehabilitation Authority (ERRA) at a reserve price of Rs225.5 million. The properties include open plots, penthouses, apartments and shops, owned by ERRA.
It also approved to sell three properties of the Civil Aviation Authority (CAA) at Rs213 million, which is the minimum reserve price recommended by the financial adviser. Three properties of the Ministry of Water Resources have been approved to be sold at a reference price of Rs275 million. These properties are located at Nicholson Road Lahore, Swat and Mansehra.
The CCoP approved the reserve price of Rs262.5 million for the Trading Corporation of Pakistan’s land situated in Multan. It approved to sell FBR’s property located at Canal road Faisalabad at a reserve price of Rs640 million.
The privatisation secretary also briefed the CCoP about the status of privatisation of two LNG-fired power plants. The government has pre-qualified all 12 parties that had submitted statements of qualifications for the acquisition of two LNG-fired power plants.
Investors from Japan, Thailand, the United Kingdom, Malaysia and Pakistan have submitted documents. A few renowned global parties have also shown interest in acquiring the power plants.
The National Power Parks Management Company Limited (NPPMCL) owns the two power plants located at Balloki and Haveli Bahadur Shah, which have a combined generation capacity of 2,453 megawatts. The government wants to sell NPPMCL in the hopes of fetching a minimum of Rs300 billion or $1.5 billion in non-tax revenue.
The privatisation ministry was currently in process of fixing issues that have so far delayed the transaction conclusion. The government of Punjab has yet to convert the agriculture land of the plants into commercial land. The water usage charges related issues are also outstanding, which the privatisation ministry was hopeful to resolve this week, subject to swift action by the provincial government.
Published in The Express Tribune, February 5th, 2020.
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