ISLAMABAD: The Privatisation Commission Board on Wednesday approved the appointment of a financial advisor who would oversee sale of 26% shares of Pakistan International Airlines to a strategic investor without transferring its liabilities.
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.