Govt to sell insurance firms’ stakes
The government on Monday decided to sell its stakes in three insurance companies and rejected the recommendations of their boards to keep those entities in the public sector, in a move that would significantly reduce its footprint in insurance business.
Headed by Finance Minister Muhammad Aurangzeb, the Cabinet Committee on State-Owned Enterprises (CCoSOEs) dismissed the recommendations of the boards of the three public sector companies to declare them as strategic and essential.
The cabinet committee after detailed discussion decided that National Insurance Company Limited (NICL), State Life Insurance Corporation (SLIC) and Pakistan Reinsurance Company Limited (PRCL) did not meet the criteria of strategic or essential SOEs and would not be categorised as essential for the public sector, according to a statement issued by the Ministry of Finance.
It added that the Ministry of Commerce was directed to explore public-private partnership model for Pak Expo Company. However, the Trading Corporation of Pakistan (TCP) will remain a strategic firm.
The Cabinet Committee on Privatisation has mandated the CCoSOEs to review and categorise these companies as strategic or non-strategic and refer the non-strategic ones for privatisation programme.
Interestingly, almost all boards of government-owned companies have been declaring their firms as strategic and essential, though many of them do not fall within these categories.
Out of the five SOEs controlled by the commerce ministry, PRCL and SLIC are already on the active privatisation programme but their boards have recommended that they be declared strategic and essential.
NICL board has also recommended keeping the entity under government control by declaring it strategic. Similarly, the boards of TCP and Pak Expo Private Limited are against their privatisation.
PRCL’s board was of the view that further offloading of 20% shares would not have any significant financial value as the company was in profit and giving around Rs900 million in dividends to the government. The company has net assets of Rs18.1 billion and its profit stood at Rs3.1 billion last year.
SLIC is managing Rs1.9 trillion in assets and is the 11th highest profitable entity. It has invested Rs155 billion in the stock market. The company earned a profit of Rs14.7 billion last year and paid Rs2.5 billion in dividend to the government.
The finance ministry said that the cabinet committee considered a summary presented by the Ministry of Science and Technology and approved the renaming and restructuring of STEDEC as Indigenous Research and Development Agency (Pvt) Limited (IRADA).
It was also directed to constitute its board and operationalise the entity by December 2024.
Earlier, the cabinet committee deferred decision on STEDEC and asked the Ministry of Science and Technology to submit a business plan. STEDEC is a technology commercialisation organisation in the public sector but it failed to deliver on its mandate.
Now, the bureaucracy has come up with the plan of renaming the company as IRADA to retain the entity instead of winding it up.
The finance ministry said that the CCoSOEs approved proposals of the Aviation Division and the Ministry of Communications for the appointment of candidates as independent directors on boards of PIA Holding Company, Pakistan Postal Services Management Company and Postal Life Insurance Company Limited.
The committee directed the Ministry of Communications to present proposals for categorisation of those entities at the earliest.
PIA Holding Co had been set up to take the ownership of assets and liabilities of PIA. The board nomination committee had recommended a three-member panel comprising Dr Ayesha Khan, Fatima Asad Said and Rahat Kaunain Hasan. The aviation ministry proposed the name of Dr Ayesha Khan.
Ayesha Khan has served on boards of banks, remained the head of corporate planning in HBL, executive director in the Abraaj Group and served on boards of Fauji Fertiliser Company, Bulleh Shah Packaging and National Rural Support Programme.
The term of the board of Postal Life Insurance Company had expired in September last year, indicating how badly these firms are managed by the government. The government has already increased the number of seats of independent directors from three to five.
The board nomination committee had recommended the names of Naeem Akhtar Sheikh, Farzin Khan, Faisal Abbasi, Abdullah Zafar and Muhammad Jamil Anwar for appointment as independent directors, which the cabinet committee approved.
The board nomination committee had recommended six names for appointment on the board of Pakistan Postal Services Management Co. The cabinet committee approved the names of Ambreen Wahee, Adnan Iqbal, Faisal Ejaz Khan, Syed Ambreen Zehra Taqvi and Waisa Noor.