Board Chairman Muhammad Zubair chairs the meeting in Islamabad on January 8, 2014. PHOTO: PID
The decision marks the beginning of the privatisation process of PIA and a total of 32 state-owned entities.
Following approval from the Board, the matter will now go to the Cabinet Committee on Privatisation.
The CCOP meeting is often considered a mere formality as all the issues are mainly decided in the PC Board.
Liabilities not to be transferred
An official of the commission said the Board had decided to privatise 26% shares on the same model which was adopted for Pakistan Telecommunication Limited.
Under this model, the government will not transfer the airline's liabilities to the buyer.
Secretary Finance Dr Waqar Masood said that by last week, the accumulative losses of PIA had increased to Rs180 billion.
A brief statement from the commission said the board had green-lighted the process of selection of a financial advisor for the exercise. The advisor will be determining the base price for the shares.
The statement added that the Board resolved to protect employee interests in the process.
Privatisation for HEC and NPCC approved
Headed by its chairman Mohammad Zubair Umar, the Board also approved the strategic sale of Heavy Electric Complex (HEC) and National Power Construction Company (NPCC).
The Board will meet again on Thursday to consider the cases of Oil and Gas Development Company and to off-load government’s shares in few commercial banks.
The Board thumbed up the strategic sale of a minimum 88% government shares in NPCC and the divestment of a minimum 96% government shares in HEC together with management control. These two entities were at the last stage of privatisation during the regime of Pakistan Peoples Party, but the previous government did not complete the process.
The HEC is one of the industrial units of State Engineering Corporation (SEC) engaged in the manufacturing of power transformers of different types, with a primary voltage rating of 66 and 132 KV.
Out of six board members, four attended the first round of the meeting.
Commitment to sell 32 entities in 3 years
Under an agreement with the International Monetary Fund, signed for a $6.7 billion loan, the government is committed to sell 32 entities in next three years.
It has finalized a three-pronged strategy, which consists of 11 capital market transactions, 17 strategic private sector partnership that includes PIA and Pakistan Steel Mills and restructuring of three entities, which are to be completed in three to five years.
Minister for Finance and Privatization, Ishaq Dar has recently stated that the government was expecting over Rs100 billion revenues from the capital market transactions.
According to Privatisation Commission officials, the authorities were estimating minimum Rs80 billion gains from 10% sale of OGDCL shares, Rs20 billion by off loading 5% shares of Pakistan Petroleum Limited, Rs15 billion from 10% shares of Untied Bank Limited, Rs50 billion by off loading 20% shares of Habib Bank and Rs10 billion by off loading 10% shares of Allied Bank Limited.
According to the Privatisation Ordinance of 2000, 90 % of net privatisation proceeds will be allocated to debt retirement and 10% to poverty alleviation programs.
COMMENTS (22)
Comments are moderated and generally will be posted if they are on-topic and not abusive.
For more information, please see our Comments FAQ
all this is the biggest fraud in the history of PAKISTAN. privatization either fully or not at all with liabilities and at arms lengths. why a Financial Adviser PIA needs a CEO privatization is done by accountants. and 26% then transfer of management choree only on Pakistan marree hoyee Quom ke saath aisa he keeya jahaiy.
well done Nawaz Sir.
ONLY INTERESTING THING TO READ WAS THIS
Under an agreement with the International Monetary Fund, signed for a $6.7 billion loan, the government is committed to sell 32 entities in next three years
Why not transfer 26% of the liabilities as well? Sounds fishy. The Steel Mills is the largest loss government controlled company. It would have been privatized a long time ago in Musharraf's time when its price was much higher and it was turning a profit. But no, thanks to the honorable chief justice of Pakistan at the time Iftikhar Chuadhry it is still not privatized, having lost many more $billions and will fetch a fraction of the price it would have 6-7 years ago. So many things to thank Iftikhar Chaudhry for, so little time.
About time. KESC is a living example of how privatization in the right hands completely turned around the fortunes of an incredibly risky yet crucial industry (electricity supply) in the nation's biggest, most volatile city in a time span of barely 8 years. I hope PIA meets a similar, bright future under privatization.
Privatising national assets is like saying to international conglomerates:You control the world, control us now. We are at your service, or mercy more appropriately. Privatising national assets is like selling your country bit by bit. If somebody can't run and manage a country's assets they should not be elected in the first place. IMF would give anything to us if we give away our country plus additional revenue to it. If private international investors control our airlines, our railways our food supply our land our oil & gas sector, our engineering services, and our daily need items, could you ever say that our government runs this country?NEVER! Such a foolish bunch of educated people running this country.
Cart before the horse? Wouldn't it make more sense to hire a qualified financial adviser to help you determine how best to privatize rather than making what amts to a political decision to sell off 26% interest. Perhaps selling 51% or 100% is the only viable way of enticing a qualified buyer?
Good move
Never heard this type of deal before.
Hopefully they privatize PIA asap.
This is a first step (appointing an advisor) Still a long way to go.
75% discount given to the frontmen. The timing is also interesting. The decision was on a hold until the lease and the guarantees on the new fleet of airplanes are paid off. Story of MCB privatization written all over it.
This is the only way we can reduce corruption in our country. Privatize all those Government institutes which are dull, dummy and causing loss to our country. This includes Steel mills, electric power companies, railways and so on... And see how well they perform under the shadow of privatization.
A person who can not manage one entity how can he run the whole country? This man will sell the whole country
Govt must complete process of privatization of all loss making units without Further delay.
Why not privatize Pakistan?
@AR PMLN has been in government since 1980's. Back then, PIA was running fine, most of the state institions were profitable and getting no money. Tell me, how many world class universities, colleges have been completed? Its just that Mian Mansha is back in action, like the last time he acquired MCB and this time he was given millions in the name of circular debt which again stands at all time high just after 3 months of payments.