Prime Minister Shehbaz Sharif has approved a new board for the Privatisation Commission – comprising politically affiliated and professional individuals – which may not create a major impact after the government has started short-circuiting the established privatisation route.
The development came on the heels of the dissolution of the existing board that had been constituted nine years ago. However, its work mostly remained restricted to selling stakes of the listed profitable entities.
The premier has approved eight names for appointment on the board of the Privatisation Commission (PC).
PM Sharif has appointed his special assistant, Jehanzeb Khan, on the board of the PC. Before his appointment, the Commission sought advice from the Law Ministry on whether a cabinet member can be appointed on the PC Board. The Law Ministry was of the opinion that since the Commission is not a state-owned enterprise, he can be appointed on the board.
Among the new members is Shahbaz Jameel, the former president of the Zarai Taraqiati Bank who has also worked in the Privatisation Commission in the past.
The PM has also appointed Farrukh H Khan as a member of the board. Khan has remained the Chief Executive Officer of Pakistan Stock Exchange Limited (PSX). He was the founding partner and CEO of BMA Capital Management Limited. BMA Capital has been engaged with the Privatisation Commission in various advisory capacities.
The premier has also appointed Pervaiz Khan to the board, who has served in the ICI firm and also has experience in the power sector.
The PM has established the new board at a time when his government is not following the route defined in the Privatisation Commission Ordinance for the sale of state assets. It first enacted an intergovernmental commercial transactions Act last year to circumvent the PC Ordinance route. Last month, the government gave Karachi port terminals to the United Arab Emirates under a negotiated deal for 25 years.
The Privatisation Commission Ordinance is meant to ensure transparency and aims at getting the best price for state assets through a competitive bidding process. The government has also shelved the competitive bidding process to set up a new multipurpose cargo terminal at Karachi and is instead negotiating with the UAE under the commercial transaction law.
The government is also in the process of enacting a new law to establish Pakistan Sovereign Wealth Fund. It is going to propose that the new sovereign fund will be exempted from three core laws: the Privatisation Commission Ordinance, Public Procurement Regulatory Authority Ordinance, and the State-Owned Enterprises (SOE) Act, 2023.
The decision to seek exemptions from these laws suggests that the government might quickly sell some of the identified assets or use them to raise loans.
After seeking these exemptions, the government plans to transfer seven profitable companies into the new sovereign wealth fund. The net worth of these assets is Rs2.3 trillion. The government has identified Oil and Gas Development Company Limited (OGDCL), Pakistan Petroleum Limited, National Bank of Pakistan, Pakistan Development Fund, Government Holdings Private Limited, Mari Petroleum Company Limited, and Neelum Jhelum Hydro Power Company Limited. The majority of these companies have also remained on the active privatisation list.
Published in The Express Tribune, July 23rd, 2023.
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