State-owned companies: Balochistan’s demand for shares turned down

Province advised to buy shares of federal companies through open bidding.

ISLAMABAD:

The federal government has rejected a Balochistan government demand for one-fifth shares of three major state-owned oil and gas companies at their ‘face value’. The provincial government had asked the Centre to allow it to buy 20% shares of the Pakistan Petroleum Limited (PPL), Oil and Gas Development Corporation Limited (OGDCL) and Sui Southern Gas Company Limited (SSGCL).

Balochistan had first placed the ‘concept note’ to this affect to Prime Minister Nawaz Sharif and later moved a summary before the Council of Common Interests (CCI) at its February 10 meeting.

The provincial government constituted its case on the basis of Aghaz-e-Haqooq-e-Balochistan (AHB) package announced in 2010, which promised extraordinary incentives to the restive but resources-rich province.

“The package – consisting of 40 clauses – provides for multifarious incentives in the constitutional, administrative and economic spheres. In terms of Clause-27 of the package, the provincial government has been allowed to purchase up to 20% shares of the PPL, OGDCL and SSGCL, when offered in the open market,” said the concept note placed before the prime minister who chairs the CCI.

The issue was discussed in detail at the CCI, the highest forum where decisions on matters among the provinces and between the federation and its federating units are made.

“On the issue of purchase of 20% shares of the PPL, OGDCL and SSGCL at their face value under the Aghaz-e-Haqooq-e-Balochistan package, the prime minister directed the Finance Division to hold detailed consultations with the provinces,” said the official handout issued after the meeting the same day.

A top official of the Privatisation Commission told The Express Tribune that the demand was unrealistic and was rejected outright. According to the official, there was no clause in the AHB to substantiate the demand.

The officials said the federal government advised the provincial government that instead of demanding these shares on their face value, it should take part in the open bidding, in which the federal government would invite international bids.

“We will be open for bidding when the shares of these entities go under the hammer. Anyone including the provincial governments can take part in the open bidding and file their bids. The successful bidder will be handed over these shares,” the official said.

The provincial government in its concept note said that if the federal government agreed to the proposal the incentive from the deal would cast a positive impact on the federation-province relationship combined with allaying public concerns about province’s age-old deprivation.

“The incentive would further augment the ongoing efforts of the government of Balochistan towards attaining a certain level of fiscal stability and redirecting the resources for social uplift, and it will supplement provincial role in terms of resource sharing of the federal entities operation in Balochsitan in the field of oil and gas sectors,” the note said.

The official said that the federal government agreed to the fringe benefits of the demand but the proposal was illogical due to its financial implications. He said if the federal government agreed to such demands of the provinces, it would need to make another review allocation to provinces under the NFC award.

“In such a case we would have to first review the NFC award and reformulate the share of provinces from divisible pool,” the official added.

He said the officials of the finance division would discuss these points in detail in the subsequent meetings with provinces on the directions of the premier. He said Sindh also had similar proposals on some entities.

Published in The Express Tribune, February 23^rd, 2014.