Govt set to sell shares in OGDC, PPL and UBL

Expects to earn Rs137b, advisers to be appointed in April.

ISLAMABAD:

After initial setbacks, the federal government is set to offload shares of three entities in international and local capital markets to raise a minimum of Rs137 billion at the present value of shares, which will bridge the shortfall in tax revenues.

As a first step, shares in Oil and Gas Development Company (OGDC), Pakistan Petroleum Limited (PPL) and United Bank Limited (UBL) would be offered to general public through capital markets, according to Mohammad Zubair, Chairman of Privatisation Commission (PC).

Zubair on Thursday gave a detailed briefing to Finance and Privatisation Minister Ishaq Dar on the current status of privatisation process. The PC would complete the process of hiring financial advisers for these transactions by the third week of April, he added.

Zubair said the government was expecting a minimum of Rs137 billion in proceeds from the three transactions,
according to a handout issued by the Ministry of Finance. The government has decided to issue Global Depository Receipts (GDRs) to offload 10% shares in OGDC.

It will sell its remaining 20% shares in UBL and 5% shares in PPL to the general public through domestic capital markets.

For the current financial year, the federal government had set a tax collection target of Rs2.475 trillion for the Federal Board of Revenue (FBR). However, due to massive tax concessions given to the influential business community coupled with FBR’s inefficiency, the government is expecting a significant shortfall in revenues.

To bridge this gap, it has decided to sell shares of blue-chip companies, a strategy that will reduce its dividends in the longer run but will surely bail it out immediately.

Zubair explained that the PC had been keeping a complete vigilance and ensuring efficiency to balance the competing objectives of maximising sale proceeds while adequately addressing labour, social and environmental issues, according to the statement.

Dar directed the PC to exercise due diligence in the preparation of offer circular. The minister also said wherever possible pre-strategic partnership restructuring would be undertaken by the government to act as a catalyst to attracting private sector strategic partnerships and investment.

He said while putting in place credible plans for restructuring, due process should not be compromised. The whole process would also provide public sector enterprises (PSEs) the incentive and flexibility to pursue long-term investment plans, thus freeing the government from micro-management of PSEs, he said.

He directed the PC chairman to prepare a detailed plan of operations and the expected timelines to meet the targets in the next meeting.

The meeting was attended by Dr Waqar Masood, Finance Secretary, Moazzam Ali, PC consultant, Assad Rasool, PC’s senior consultant and Rana Assad Amin, Adviser to the Finance Division.

Published in The Express Tribune, March 21^st, 2014.

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