Strategic status for Shalimar Co rejected

Ministry proposes public-private partnership as company faces insolvency

ISLAMABAD:

A cabinet body on Tuesday refused to declare Shalimar Recording and Broadcasting Company as strategic, directing the Ministry of Information to find its own path to protect the company from becoming insolvent.

The Cabinet Committee on State-Owned Enterprises (CCoSOEs) discussed the Ministry of Information's proposal to authorise Shalimar Recording and Broadcasting Company (SRBC) to enter into public-private partnership (PPP) to avoid insolvency.

Headed by Finance Minister Muhammad Aurangzeb, the committee did not declare the company as strategic and essential and instead instructed the ministry to find its own path.

The company's outstanding liabilities have increased to Rs2 billion and it is unable to pay salaries of its employees.

However, the cabinet committee was of the view that the federal cabinet has only declared Pakistan Broadcasting Corporation (PBC) and Pakistan Television Corporation (PTV) as strategic and essential entities under the Ministry of Information and Shalimar Company does not qualify for this status. PBC and PTV own Shalimar Company.

Members of the committee were of the view that the information ministry may try to enter into PPP mode and in case it remains unsuccessful, Shalimar Company should be closed down.

The federal government has not yet been able to privatise any entity and its efforts to save expenditures by closing down some departments and ministries have remained futile.

The federal cabinet on Tuesday did not approve a summary for the implementation of second phase of rightsizing. It sent the matter to the Cabinet Division after some ministers objected to the move.

Speaking at a meeting of the Senate Standing Committee on Finance, Muhammad Aurangzeb said that he had presented the second phase of rightsizing but the cabinet suggested some changes. "The cabinet otherwise was satisfied," he said.

The government has also failed to privatise Pakistan International Airlines (PIA). Privatisation Minister Abdul Aleem Khan said on Tuesday that the government will now make another attempt but will adopt a better and different strategy in light of the previous experience. Against the minimum sale price of Rs85.03 billion, the government received a Rs10 billion bid from a real estate company to run PIA.

The government's focus has so far remained only on increasing tax collection, particularly from the salaried class and manufacturers. Its drive to get due taxes from traders has also failed while provinces were not very keen to expand tax base to the agriculture sector. The Cabinet Committee on SOEs was told that Shalimar Company's board had recommended entering into a public-private partnership.

The board considered six different options, which included the company's merger with PTV, entering into a PPP deal, outright privatisation, slapping Rs5 on every bill of electricity, selling airtime and getting a bailout package from the government.

PTV is already providing the company with Rs40 million in monthly cash injection. The cabinet committee was informed that the growing financial burden of Rs2 billion worth of liabilities has caused a severe financial crisis, which impacted the company's ability to pay salaries and cover essential operational cost.

The information ministry also sought opinion of the Privatisation Commission, which stated that the cabinet had not declared Shalimar Company as strategic and essential; rather it was silent.

The cabinet committee reviewed the implementation of decisions taken previously related to the Ministry of Information, Ministry of Petroleum, Ministry of Railways and Federal Board of Revenue. The committee took presentation on pending six cases, which were related to the Cabinet Division and other ministries.