One step closer: Govt forms committee to set price for PPL shares

Scrips will be sold in stock market through secondary public offering.


Shahbaz Rana March 23, 2012

ISLAMABAD:


The government on Thursday constituted a committee to determine transaction structure and set price for offloading 2.5% shares of Pakistan Petroleum Limited (PPL) in the stock market through a secondary public offering.


The decision to this effect was taken in a meeting of the Cabinet Committee on Privatisation, headed by Finance Minister Dr Abdul Hafeez Shaikh.

The meeting was convened to take up the summary of the Privatisation Commission for approval of the transaction structure and strike price at which the option to buy or sell shares will be exercised, for the PPL secondary offering.

The finance minister, after deliberations on the strike price and transaction structure, decided to constitute the committee. Federal Water and Power Minister Naveed Qamar will head the body, which will have Petroleum and Natural Resources Minister Dr Asim Hussain, privatisation secretary and Securities and Exchange Commission of Pakistan chairman as members.

The committee will fine tune the transaction structure, strike price and other aspects of the proposal and submit recommendations to the chairman shortly.

“The CCOP agreed in principle to approve the summary moved by the Ministry of Privatisation for the transaction structure and pricing for Pakistan Petroleum secondary public offering,” said an official announcement.

This will be the first sale of government shares in state companies after November 2008, when Hazara Phosphate Fertilisers was sold to Pak American Fertilisers for Rs1.34 billion.

The government has remained unable to press ahead with planned privatisation and floating of shares of companies in stock markets because of domestic political and economic uncertainties and turmoil in the global market.

The summary had authorised the finance minister to ratify the strike price determined through book-building process or to meet urgently to decide on the strike price, said the finance ministry.

Last year, while approving the transaction, the government had assessed that it would earn at least $70 million (Rs6.4 billion) through the public offering.

However, the fresh value of the transaction can only be assessed after finalisation of the strike price.

PPL contributes around 25% of the country’s natural gas supplies besides producing crude oil, natural gas liquid and liquefied petroleum gas. In July 2004, the government sold 15% shares of PPL through initial public offering, raising Rs5.64 billion, according to the Privatisation Commission.

The Privatisation Commission has proposed to the CCOP for the sale of 2.5% government shareholding in PPL through the transaction structure which offers half (1.25%) of the shares to institutions, both local and foreign, and high net-worth individuals through book-building.

Another 25% (0.625%) will be offered to foreign investors through preferential allocation and the rest will be offered to general public through subscription.

Published in The Express Tribune, March 23rd, 2012.

COMMENTS (1)

Harry Stone | 12 years ago | Reply

There are more committees than people in PAK and one has to ask just what they accomplished?

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