Government puts off sale of assets

Privatisation transactions will be completed after local and international markets recover

ISLAMABAD: The federal government has put on hold the sale of nearly two and a half dozen state-owned immovable properties and the remaining privatisation transactions will be completed after the global economy recovers from the impact of the novel coronavirus outbreak.

The move is likely to endanger the multibillion-dollar privatisation programme, which must be completed in time to meet the fiscal targets agreed with the International Monetary Fund (IMF).

“The sale of 28 properties for final auction has been delayed due to the government restrictions on gatherings and unavailability of auction houses and related facilities,” read a handout issued by the privatisation ministry on Friday.

Prime Minister Imran Khan initially wanted to sell these 28 properties to retire public debt but the chances of fetching a significant amount of money in the present circumstances are dim.

“Most of our transactions are at an advanced stage and can be completed in time provided the national and international markets quickly recover from current health crisis situation and overcome the coronavirus-related obstacles,” it added.

The federal government had planned to offset the steep shortfall in tax collection of the Federal Board of Revenue (FBR) with higher non-tax revenue, mainly on account of the State Bank profits and privatisation proceeds.

The sale of two LNG-fired power plants is extremely critical for the government before the end of June to raise about Rs300 billion in non-tax revenue. However, this transaction is now expected to be delayed till next year.

Even before the COVID-19 outbreak in Pakistan, prospective investors had raised questions over the growing circular debt particularly in the LNG sector due to the expensive import of gas from Qatar.

The privatisation ministry said all relevant partner organisations had been requested to complete the due processes despite the problems.

It said that a meeting of National Electric Power Regulatory Authority (Nepra) was held on Friday presided over by its chairman, Tauseef Ahmed, on determination of re-gasified liquefied natural gas (RLNG) plants’ tariff, which was likely to be announced early next week.

A series of video conferences have also been planned with prospective investors of RLNG plants in the coming week despite difficulties in accessing all stakeholders, it added.

The ministry said despite the dire situation of lockdowns and the lack of connectivity, the privatisation programme was moving ahead at a consistent pace by quickly shifting to video conferencing and the completion of pre-requisites of due diligence by national and international financial advisers as per the original timelines so far.

It also said all-out efforts had been made to complete all the pre-bidding formalities in time.

However, as prospective investors and their counterpart international financial institutions have indicated concerns in the wake of the downfall in international markets, the bidding timelines have become unpredictable, said the ministry.

The prospective investors have requested an extension in timelines which are being analysed and considered in view of the rapidly changing situation.

The finance ministry is currently in the process of analysing the impact of the viral outbreak on its fiscal framework.

The initial estimates suggest that the budget deficit may cross 8.5% of the GDP against the original target of 7.1%.

Even the privatisation ministry could not complete major transactions and the FBR revenue too remained around Rs4.5 trillion. The budget deficit might end up near 10% of the size of the national economy.

The IMF said on Friday that Pakistan has reaffirmed its commitment to the targets agreed under the 39-month Extended Fund Facility despite the challenges it faced because of the viral outbreak.