The federal government has abandoned the proposed plan to privatise Pakistan National Shipping Corporation (PNSC) via public offering of a significant number of shares at the stock exchange.
The objective was to explore additional funding sources by increasing private shareholding through the stock exchange to increase its fleet size.
PNSC was established under the Pakistan National Shipping Corporation Ordinance 1979 and is a company listed on the Pakistan Stock Exchange (PSX). The government of Pakistan holds 87.56% shares, while the general public and the PNSC Employees Empowerment Trust hold 10.87% shareholding.
It was informed at a high-level meeting that in terms of paragraph 11 of the State-Owned Enterprises (Ownership and Management) Policy, 2023 (SOE Policy, 2023), the categorisation of an SOE was required to be made by the ministry concerned in consultation with the relevant board.
The matter was accordingly referred to PNSC for consideration by its board of directors. The board, in its meeting on May 17, 2024, resolved that PNSC should be retained and categorised as a "strategic state-owned enterprise."
The board noted that PNSC was a profitable commercial entity providing direct services to other organs of the state and ensuring effective supply chain schedules. It also acts as a second line of defence during conflicts, sanctions, and wars.
The Ministry of Maritime Affairs had noted that PNSC had an ageing fleet of ships, which would outlive their operational utility in the coming years.
The ministry, therefore, submitted a summary to the Cabinet Committee on State-Owned Enterprises (CCOSOEs) with the recommendation that PNSC may be considered for privatisation through the stock exchange to generate a public offering of a sizeable number of shares.
However, it was also proposed that views of the strategically concerned ministries be sought before including PNSC in the privatisation list. The Cabinet Division advised that the Ministry of Maritime Affairs should first obtain their views and comments.
The Ministry of Maritime Affairs accordingly sought views and comments on the categorisation of PNSC as a strategic state-owned enterprise.
The ministries concerned argued that PNSC was engaged in strategic functions of significant importance and the corporation fell under the category of "strategic SOE". During crises and wartime, the war risk surcharge imposed by private shipping companies would be exorbitant and an additional financial burden on the national economy.
Moreover, the assurance of state-owned maritime shipping for sustained sea lines of communication holds paramount importance. They recommended keeping the privatisation of PNSC in abeyance.
They further said that PNSC, being a profitable commercial entity, provided direct services to other organs of the state, ensuring effective supply chain schedules.
PNSC would also act as a second line of defence during conflicts, sanctions, and wars and would be utilised for transporting sensitive cargo. Therefore, they argued that the privatisation of PNSC would be a strategic compromise, adversely affecting both national security and the national economy.
In September 2024, the CCOSOEs considered a summary titled "Declaration of Pakistan National Shipping Corporation as a Strategic State-Owned Enterprise," and categorised PNSC as a strategic SOE.
It directed PNSC to explore additional funding sources by increasing private shareholding through the stock exchange for increasing its fleet size.
The matter was also referred to the task force on the revamp of Pakistan's maritime sector for its recommendations. The task force, in its meeting held on October 24, 2024, considered the agenda of determining the status of PNSC and agreed to the recommendations of the CCOSOEs.
The cabinet considered a summary titled "Declaration of Pakistan National Shipping Corporation as a Strategic State-Owned Enterprise," submitted by the Maritime Affairs Division. It did not ratify the decision of the CCOSOEs taken on September 2, 2024, with the observation that the case of PNSC would be considered along with cases of similar organisations.
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