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.