Profitable SOEs erased from sell-off list

Dar asks for revisiting list, adding all loss-making SOEs to privatisation programme

Shahbaz Rana May 11, 2024


Deputy Prime Minister Ishaq Dar on Friday gave directives to remove seven profitable companies, placed at the disposal of Pakistan Sovereign Wealth Fund, from the privatisation plan but included Roosevelt Hotel, New York in the active privatisation list.

Dar in his capacity as chairman of the Cabinet Committee on Privatisation (CCOP) did not approve the proposed five-year privatisation agenda. In the maiden CCOP meeting, he found flaws in the categorisation of 85 government-owned commercial enterprises and directed the ministries concerned to revisit the whole programme.

The CCOP meeting came days after the Privatisation Commission (PC) board approved only 21 enterprises for sell-off while excluding the remaining 64 entities.

Dar asked for revisiting the entire list again and bringing all the loss-making enterprises to the active privatisation programme. He did not agree to the proposed timeframe for the 21 entities approved for privatisation by the board in the next one to three years.

In addition to the 21 entities, which were mainly related to the power sector, he added three more entities to the provisional list including the Roosevelt Hotel.

A statement released by the PC said the CCOP was presented with a phased privatisation programme (2024-29) by the Ministry of Privatisation.

The CCOP chairman directed officials to exclude seven highly profitable firms from the privatisation list as they had already been placed at the disposal of Pakistan Sovereign Wealth Fund.

Profits of these firms will be used to start joint ventures with foreign nations. The Sovereign Wealth Fund Act 2023 excludes such firms from the purview of privatisation.

The CCOP asked to permanently delete Oil and Gas Development Company Limited (OGDCL), Pakistan Petroleum Limited, Mari Petroleum, National Bank of Pakistan, Pakistan Development Fund, Government Holdings (Private) Limited and Neelum-Jhelum Hydropower Company from the privatisation programme.

It also did not approve the transfer of OGDCL shares from the privatisation ministry to the energy ministry due to the company’s ownership by the wealth fund.

The CCOP considered a proposal for transferring 322.46 million shares of OGDCL from the PC’s account to the Ministry of Energy, according to the statement. However, the matter was deferred with the directive to the Law and Justice Division to examine provisions of the Sovereign Wealth Fund Act 2023 and submit its recommendations to the CCOP.

The Express Tribune reported last week that out of the 85 commercial entities, the ministries did not recommend the privatisation of 38 entities by declaring them strategic and essential.

Only 21 firms were recommended for privatisation, of which 15 had been on the active privatisation list for a longer period. The list of 21 was increased to 24 but the approval remained provisional.

The CCOP, while approving the 24 entities, directed the Ministry of Privatisation to deliberate on the phasing out of each entity in consultation with the respective ministries.

The privatisation ministry said that the CCOP decided that the 40 state-owned enterprises (SOEs), categorised as strategic or essential, would also be placed by the respective ministries before the Cabinet Committee on State-Owned Enterprises (CCOSOE) for their categorisation.

These entities will only be treated as essential and will not be considered for privatisation, if the CCOSOE described them as essential. Those SOEs which will not be categorised as strategic or essential will be included in the privatisation programme.

Different ministries have declared SOEs like Pakistan Tourism Development Corporation, Pakistan Expo Centre and SME Bank as strategic, which did not make any sense.

Similarly, the CCOP directed the Ministry of Privatisation to deliberate on the rationale provided by the ministries for not including 18 SOEs in the privatisation list.

In case there is no justification for retaining them, the CCOP in the next meeting will decide to place all of those in the privatisation programme, according to a federal cabinet minister.

Among these 18 SOEs are Pakistan Textile City Limited, Pakistan Revenue Automation Limited, National Fertiliser Corporation, Pakistan Industrial Development Corporation, Pakistan Steel Mills, Pakistan Engineering Corporation, Pakistan Telecommunication Company Limited, Sui Northern Gas Pipelines Limited, Sui Southern Gas Company and Pakistan Railways Freight Company.

With the above directives, the CCOP told all the ministries and divisions to take up their cases of strategic and essential SOEs with the CCOSOE at the earliest so that a comprehensive phased privatisation programme could be finalised in the next CCOP meeting.

The Cabinet Division has opposed the privatisation of Pakistan Tourism Development Corporation and Printing Corporation of Pakistan. The Commerce Division has opposed the privatisation of Pakistan Reinsurance Company Limited, National Insurance Company Limited, State Life Insurance Corporation, Trading Corporation of Pakistan and Pakistan Expo Centre.
The communication ministry is against the privatisation of National Highway Authority and Pakistan Post Office.

The Finance Division has opposed the privatisation of SME Bank, National Bank of Pakistan, Industrial Development Bank of Pakistan, Pak-China Investment Company, Pak-Iran Investment Company, Pak-Libya Investment Company, Pak-Oman Investment Company, Pak-Kuwait Investment Company and Pak-Brunei Investment Company.

The Finance Division has also opposed the privatisation of National Investment Trust Limited.

The industries ministry has not agreed on the privatisation of National Fertiliser Corporation, Pakistan Industrial Development Corporation, Pakistan Steel Mills, Small and Medium Enterprises Development Authority, State Engineering Corporation and Utility Stores Corporation.

The IT ministry has opposed further offloading of shares of Pakistan Telecommunication Company Limited.

Published in The Express Tribune, May 11th, 2024.

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