New PC board chairman hangs in limbo
Privatisation Commission has geared up for the sale of power distribution companies and will do its best to complete the task while remaining within its legal mandate, said privatisation ministry spokesperson. PHOTO: FILE
The government has withheld the notification for appointment of Mohammad Saleem as new chairman of the Privatisation Commission, as prospective investors have also started pulling out of the privatisation programme due to ambiguity in policies and highhandedness.
In November last year, the federal cabinet had approved removal of Federal Minister for Privatisation Mohammad Mian Soomro as chairman of the board and replaced him with Mohammad Saleem. However, despite the lapse of over one and half month, the government has still not issued notification to remove Soomro and bring in Saleem.
The notification for the appointment of the new chairman of the commission has to be issued by the Establishment Division after clearance from the Prime Minister’s Office, said Samreen Zehra, the spokeswoman of the Commission.
She said that the file to implement the decision was still under process.
The delay in implementing the cabinet’s decision highlights ambiguity in the government’s policies that have started taking a toll on the environment of the Privatisation Commission.
The uncertain policies of the Pakistan Tehreek-e-Insaf government have also impacted the SME Bank privatisation transaction after two bidders, including Veon Holdings, pulled out of the process. Veon Holdings, that owns Pakistan Mobile Communications Limited, pulled out in retaliation to Federal Board of Revenue’s decision to freeze its bank accounts, showed official documents.
After coming into power, the PTI government had drastically reduced the privatisation programme from active 65 entities to initially just 11. But no transaction could be carried out during the first two years while in the third year, few vacant plots and a hotel were sold. These transactions fetched a total Rs3 billion in three years against the cumulative target of Rs502 billion for this period.
Subsequently, the federal government relieved Minister for Privatisation Mohammed Mian Soomro from the position of chairman of Privatisation Commission board by appointing new chairman, Saleem Ahmed, who has worked in JP Morgan.
This has created confusion in the Privatisation Commission and the Ministry of Privatisation. Under the law, the privatisation business is carried out by the Privatisation Commission board and the new appointment has rendered the minister’s position ineffective.
The sources said that Saleem had also demanded that his status should be equal to Minister of State, which also became a reason for a delay in issuing the notification. Finance Minister Shaukat Tarin had also expressed concerns over the performance of Mohammad Mian Soomro.
It is also not clear who will be in-charge of over Rs2 billion privatisation fund after separation of positions of the minister and the chairman.
No board meeting has been held since the government decided to remove Mohammad Mian Soomro, although the Cabinet Committee on Privatisation met on December 31. According to PC Ordinance, all the privatisation related powers rest with the chairman of the Board and Minister is just a ceremonious position.
Classical case of SME Bank
The dilly-dallying approach has impacted the SME bank privatisation transaction that seemed certain few months ago but is now taken up for removal from the privatisation programme.
The PTI government had approved the transaction structure for privatisation of SME Bank in November 2019. Ten parties had submitted interest and five had gone to the extent of submitting documents.
Subsequently, four investors were pre-qualified by the board in June 2020. These included MCB Bank Limited, Pakistan Kuwait Investment Company (Private) Limited, Pak Libya Holding Company (Private) Ltd, Veon Holding and Saudi Pak Industrial and Agricultural Investment Company Limited.
But one after another all the bidders pulled out of the process due to change in the government’s policies. Recently, the financial advisers hired to privatise the SME Bank made detailed presentation to the board, highlighting the concerns of each of the pre-qualified bidders.
The financial adviser apprised the board that although major concerns of the pre-qualified bidders were addressed, however, request of two of the pre-qualified bidders for provision of deposit of Rs10 billion for a period of 10 years either by the government or the SBP was not agreeable being out of the scope of approved framework.
Published in The Express Tribune, January 13th, 2022.
Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.