Cabinet okays ordinance to sell assets

Move desperate attempt to prevent country from default

ISLAMABAD:

In a desperate attempt to save the country from default through emergency sale of state’s assets to foreign countries, the federal cabinet has approved an ordinance to bypass all the procedures for the process and also abolished regulatory checks including the applicability of six relevant laws.

Through the Inter-Governmental Commercial Transactions Ordinance 2022, the Centre has also empowered itself to issue binding instructions to the provincial governments for land acquisition, according to a copy of the ordinance.

President Arif Alvi has not signed the ordinance yet.

The government has also barred the courts of the country not to entertain any petition against the sale of assets and shares of the government companies to foreign countries, as per the ordinance.

The federal cabinet had approved the ordinance on Thursday to sell stakes of oil and gas companies and government-owned power plants to the UAE to raise $2 billion to $2.5 billion to avoid the looming default.

The UAE had in May refused to give cash deposits due to Islamabad’s inability to return previous loans and instead asked to open its companies for investment.

Finance Minister Miftah Ismail had said this week that it usually took 471 days to complete one privatisation transaction. He had added that the government had to conclude deals with foreign countries in days to urgently raise funds.

The International Monetary Fund (IMF) has placed a condition that Pakistan’s case could not be taken to the board until it arranged $4 billion from friendly countries to bridge the financing gap.

The federal law minister had not provided the reason for the purpose of this article.

Pakistan’s rupee shed 8.3% of its value this week -- the steepest since November 1998, indicating the gravity of the challenges that the government is facing.

However, the ordinance has raised many transparency concerns, including the determination of the prices of the shares of the Mari Gas Company, Oil Gas Development Company Limited and Pakistan Petroleum Limited amid their low market price compared with their book values.

The ordinance will provide for a mechanism to carry out a commercial transaction under an inter-governmental framework agreement to promote, attract and encourage foreign states to have economic and business relations with Pakistan, according to the documents.

The Cabinet Committee on the Inter-Governmental Commercial Transactions will be formed that will have sweeping powers, including those overriding six Acts of parliament. The ordinance makes the federal cabinet so powerful that it can even issue binding instructions to provinces to hand over any piece of land and enter into a transaction with a foreign state.

The cabinet committee’s decisions can neither be challenged in the courts nor any investigation agencies open those deals, according to the ordinance.

The “Inter-governmental framework agreement” or “G2G agreement” means an agreement or memorandum of understanding entered between the federal government and the government(s) of foreign state(s).

The scope of the ordinance will be expanded to all “commercial transactions” including sale, purchase, investment, divestment, procurement, licensing, lease, joint ventures, assignments, concessions, services contracts, management contracts or other deals arising out of a G2G or commercial agreement, according to the documents.

The commercial pact under the G2G agreement shall be negotiated and executed between the nominated entities of the federal government and government of the foreign state.

The Cabinet Committee on the Inter-Governmental Commercial Transactions will authorise negotiations for a G2G agreement between the federal government and government of a foreign state.

It will form a negotiation committee(s) for G2G or commercial agreements, and approve price discovery mechanisms.

However, sources said the price discovery mechanism could become controversial in the absence of transparency and low stock values due to a plunge at the Pakistan Stock Exchange.

The cabinet committee will also recommend approval of G2G or commercial agreements finalised by the negotiation body.

It will recommend for exemptions, exclusions or concessions from regulatory compliance and authorise fast track procurement of services of transaction advisors or consultants; and take such decisions necessary for expeditious execution of commercial transactions, according to the ordinance.

The cabinet committee will have the power to pass necessary directions for removal of hurdles or difficulties.

Importantly, the federal government may issue “appropriate directions” to the provincial government, local government or agency or authority concerned to implement the objective of the inter-governmental commercial transaction including land acquisition, rehabilitation and resettlement, provision of utility services, construction of approach roads to the main highways and such other activities of similar nature.

The sources said the powers had been obtained to sell the land of the two LNG-fired power plants to the foreign country along with their machinery.

The federal government can exempt any inter-governmental commercial transaction from the regulatory requirement or operation necessitated by any law for the time being in force for the purposes of this ordinance.

This sweeping clause has been introduced to shorten the sale of the government shares by overstepping the Companies Act, Securities and Exchange Commission Act, Privatisation Ordinance and other relevant laws.

According to the ordinance, no court in the country shall entertain an application, petition or suit against any process or act of sale of assets to the foreign entity. However, legal experts say that the courts do not accept such ouster clauses.

The ordinance states that no court shall grant an injunction or entertain any application for injunction against any process undertaken, intended or purported to be undertaken for a commercial transaction or agreement.

No suit, prosecution or any other legal proceedings or action in damages can be claimed against people who will be involved in selling these assets.

The indemnity has been extended to “anything done”, including procedural lapses or omission in exercise or performance of any functions, power or duty conferred or imposed by or under the ordinance or any administered legislation unless the act or omission is shown, beyond reasonable doubt to have been in bad faith.

Similarly, no investigating agency, anti-graft agency, law enforcement agency or a court can initiate inquiry into or initiate investigation for any procedural lapse or irregularity by any person in a commercial transaction or agreement under the ordinance unless there exists an evidence of personal monetary gain with corroborative evidence of link between such monetary gain to the undue benefit rendered to any party of the agreement.

No person will be sued in his personal capacity for action taken in his official capacity.

The government has also set aside six laws for undertaking these commercial transactions to sell stakes to foreign powers.

These are the Companies Act, 2017, Privatisation Commission Ordinance, 2000, Public Procurement Regulatory Authority Ordinance, 2002, Public-Private Partnership Authority Act, 2017, Securities and Exchange Commission of Pakistan Act, 1997, Securities Act, 2015 or any other law for the time being in force or in any instrument having effect by virtue of any law other than the ordinance.