Reducing burden: Rs500b is the expected decline in state losses after privatisation and restructuring process. CREATIVE COMMONS
As part of its privatisation plan, the government will sell half a dozen enterprises including two hotels in New York and Paris, offload shares in 10 companies in international and domestic capital markets and hand over management control of a dozen enterprises to the private sector.
The shares in state-owned units that the previous government gave away to the employees under the Benazir Employees Stock Option Scheme will also be offered to private investors, according to documents.
Overall, 31 enterprises, worth billions of dollars and belonging to sectors such as oil and gas, banking and finance, power, industries and real estate, will be privatised and restructured. Last week, the Cabinet Committee on Privatization (CCOP) approved the privatisation and restructuring strategy for these enterprises.
The government approved giving Pakistan Steel Mills under the control of private sector and reducing its shareholding. It is among five firms that will be first offered for privatisation. In case of Pakistan International Airlines, more money will be injected into the carrier before selling 26% stake to a strategic partner along with management control.
“From the date of privatisation, liabilities of the enterprises will be the responsibility of buyers,” said Muhammad Zubair, Chairman Board of Investment. Financial condition of an enterprise would determine its market price, he said.
The government approved sale of Roosevelt Hotel New York, Scribe Hotel Paris and Islamabad Convention Centre. Pakistan Engineering Company Limited (25% government shareholding) and National Power Construction Company (100% government stake) will be sold.
Heavy Electrical Complex (100% state-owned) and National Investment Trust (also 100% state-owned) will also be privatised while Small and Medium Enterprise Bank (94% government shares) will either be privatised or offered for merger with a second or third-tier bank.
“The government wants to complete the process in the next one to one and a half years,” said Zubair, adding the privatisation and restructuring process was expected to reduce annual losses by Rs500 billion.
There are 10 enterprises whose shares will be offloaded in capital markets, either domestic or international, according to the strategy approved by the CCOP.
The government will preferably sell shares in Oil and Gas Development Company (85% government stake) in international capital markets. Shares in Pakistan Petroleum Limited (78% government stake) will be offloaded both in international and domestic markets.
Shares in Mari Petroleum (20% government stake) will be sold in the capital market through a secondary public offering or offered as block sale to joint venture partners.
Government Holdings Private Limited (100% state-owned) will either be listed on the stock market or working interests in its specific blocks will be sold. Pak-Arab Refinery Company’s shares (60% owned by government) will be offered in the stock market subject to consent of the joint venture partner.
Approval has been given to a plan to segregate different operations of Pakistan State Oil and privatise some of those.
According to the strategy for Sui Northern Gas Pipelines and Sui Southern Gas Company, the government will first segregate various operations and some of these will be offered for privatisation.
Shares in Habib Bank Limited (42% government stake), United Bank Limited (20% government shares) and Allied Bank Limited (10% government stake) will be offloaded in the stock market through a secondary public offering. In case of National Bank of Pakistan (76% shareholding), the government will reduce its shareholding and give away management control or offer the bank as block sale to qualified investors.
State Life Insurance Corporation (100% state-owned) will be listed on the stock market while shares in National Insurance Company Limited (100% state unit) will be divested along with management control. Government shareholding (51%) in Pakistan Reinsurance Company will be reduced including giving away management control.
In case of profitable companies like banks and oil and gas firms, the government would not sell all of its shares, Zubair said.
Published in The Express Tribune, October 8th, 2013.
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I am the employee of one of O&G company and we work around 10-12 in normal and some time more hours to maintain smooth operation of plant. with the operations of gov. owned companies do you think how cheap resources you get. this will be revealed soon after when multinational companies charge you 5-10 time more than now. Can Mr Nawaz sharif tell people that how many firms he has sold dur to bad performance if he can run own institutions than he also can make run gov owned copmanies if not want to make happy IMF, therefore instead of selling precious assets make them efficient by contol and repalcement of management. Lets make an expamle of wapda. recently rate per unit were rivised. can any body tell that any action to control theft and proper recovery made other than rate revision. can energy meters of prepaid units provided, spot checks and committies for random checks and analyssis made. never, just rate revised for tohse who are paying the bill to make them not to pay for next time and make some arrangement as other are doing. For gas: why we are waisitng gas in CNG, power and domestic use. only to make reason for gas shutdown/curtailement for fertilizer. For railway i can say if DAEWOO can reach in time from pindi to karachi by our broken roads then there is nothing wrong with our railway to imporve if there is intension to improve. Thanks Every thing is ok with gov. companies justmatter of control and management. I request our leader to come our of your offices and work for improvement and please dont waiste your assets.
Dear all, We did not understand the pholosophy and strategy of governemnt for selling own assets on instruction of IMF, We need to think more sincerely and anlalyze the problem. Its like cut the duck to get all golden eggs but ultimately we will not find y one. If we talk about oil and gas sector then can u imagine the difference between prices and if government bring state owned companies gas prices to those of omv and lasomo then PPL and OGDC will be most profitable complanies. instead of privitazation u should stop selling gas in CNG, power sector and houe hold use. cut down the huge emplyement from railway and make it efficient. hire forigners if we cannot operate. Instead of increasing rates of electricity on daily basis gov. should ensure bill collection form all users. what do u think how much percent users pay actual bill. increasing rate means to stop bill paying users to shift to theft. why gov retains railway minister if he can not perform and why chirm an and other high efficial are being retained if they cann ot per form . it matter of control and sincereity not the money. all the money will be spent in few months and what then , become begger to IMF.. All Govt emplyees should be on contract basis and promotions should be on performance basis. Kindly make system better instead of selling your asset and dont try to get bowl for begging.
@S A Hussain: You feel bad for those people who take incomes and dont do any work? There is a very specific word in Islam for it, maybe you know it? The inefficient workers/over hired should lose their jobs. They usually get these jobs through political contacts anyway. So why should we feel bad for those who cheated the system to begin with?
profit making companies shares should be retained
@Mutahir: in case youre not already noticing, the 'awam' has been suffering since all these institutions were nationalized by bhutto. in some cases, these firms were outright stolen from great businessmen. it is a fundamental misunderstanding of economics and finance as well as greed and political maneuvering that these firms are still in government hands. Sell shares and management in everything to private companies. At worst, retain minority holdings if you would like to substitute taxes for profits.
There needs to be a distinction between profit making and loss making SOEs.Government might save 500 billion of losses... But what about the staff that will be fired ? After listing stocks of these erstwhile SOEs we will expect manipulation by the "movers and shakers" ... Any Idea how much tax will it add to the exchequer ?
Can we keep the Roosevelt Hotel New York, please?
Well well.. At last some rational decisions are done by GOP.But SOE's are assets of Pakistan.The govt. should strive to get after fix of SOE's.Intention couldn't be measured it reflect after sometime.Capitalists of Pakistan are greedy to benefit of these privatization.We will see when the govt. can take ball back in her court.
Excellent decision. Nowhere in the world are present state-run enterprises. Government should provide conducive environment for sectors to grow. This is going to payback not only in short term but also in long term.
State owned enterprises, PSM, PR and PIA, specially had been the hatcheries for the Jialaz of PPP. This action might mark an end to political hiring. And performance would improve for sure. PSM, PR and PIA are so massive in sizes, these entities can actually spur the national growth if tactfully managed.
It is an extreme shame to sell companies like State Life, National Bank of Pakistan, HBL and Pak Re Insurance. they are extremely profit making companies and are an asset to the Government. Pakistan - A fools Paradise.
Although, this might alleviate the burden for the time being but losing State owned businesses mihgt not be prudent in the longer run. The customer i.e. the awam will suffer.
So how exactly is the government going to sell shares already given to workers?