Govt offloads 5% stakes in Pakistan Petroleum Limited
The government went through with the transaction despite being advised not to, due to the volatile political situation which could result in political turmoil and a financial loss.
The Cabinet Committee on Privatisation (CCOP) on Saturday endorsed the strike price of Rs219 per share to sell 5% shares in PPL, which is Rs14 higher per share than the base price, said Mohammad Zubair, Chairman Privatisation Commission while announcing the outcomes of the second capital market transaction in as many weeks after the CCOP meeting.
Despite political rallies and violent incidents that happened in Lahore, Islamabad and Peshawar, the PPL transaction was successfully completed which showed that the government was in full control of the events, said an upbeat Zubair who has two successful transactions on his credit.
About a fortnight ago, the government had sold 19.8% its stakes in United Bank Limited for Rs38 billion.
Zubair said it was the first time in the country’s history that any capital market transaction was closed on a premium, which showed that the investors have confidence over the government’s economic policies.
The government had offered 70.06 million shares at a discount price of Rs205, which was 4.2% lower than the market price. It had anticipated an earning of Rs14.3 billion.
Due to high demand, the shares were sold at Rs219, giving a premium of Rs1 billion over and above the floor price, Zubair said. On the basis of the prevailing market price of Rs213.92 per share, the government earned a premium of Rs343 million.
Zubair said the PPL’s 70 million shares were offered to international and domestic institutional investors and high net worth individuals. He said 24% of the shares were bought by the individuals, showing the increasing confidence of people on government policies.
The floor price of Rs205 per share total orders of Rs29.33 billion for 143 million shares were received, which was also the highest ever offer against any capital market transaction, Zubair said.
At the strike price of Rs219, the government received Rs16 billion orders for 73 million shares.
Zubair further added that there were two views on whether the government should carry out the transaction after recent incidents that took place in Lahore, Islamabad and Peshawar. He said that the PPL transaction was completed in a very difficult environment.
“Had the government postponed the transaction, it would have dented the image of the government and Pakistan,” said Zubair, adding that at a time when various political segments were holding rallies, a lot of positive things were also happening, such as the PPL transaction.
Nawaz congratulates PC over PPL transaction
Prime Minister Nawaz Sharif congratulated the Privatisation Commission on the successful conclusion of Pakistan Petroleum Limited (PPL) capital market transaction.
“I am happy that for the first time in our history, government has been able to sell the shares at a premium (higher than the market price),” an official release quoted Nawaz.
The premier added that it was the faith and trust of investors in the economy that the government received bids for more than 143 million shares worth Rs30 billion against an offering of 70 million shares worth just Rs14.3 billion.
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@Umer: You should protest against this great conspiracy outside your city's press club.
The idea that Nawaz Shariff or any other individual will use his own private funds to save Pakistan is laughable. Any money that was stolen is long gone. High time you understood this.
@Nasir Mahmood: No one will buy our loss making enterprises. Do you follow the news? Have you seen the state of the country? No foreigner would be insane enough to put his money in a loss making Pakistani company.
@Shahzad: Wow great you are so informed! I guess you never had the chance to study China's economy or the multitude of government owned corporations in EU and Russia.
@daalar:
I didn’t steal those billions in the first place; Nawaz Sharif & Co needs to bring back those assets. Instead he is selling more of our assets leaving us with nothing, to please foreign master who love buying a country’s valuable assets for pennies. This is a conspiracy against the nation pure and simple just so Nawaz Sharif can maintain support from international establishment to stay in power.
With dozens of its family member in government, Some member of Shareef Dynasty getting enriched from these random privatization acts.
History shows PPL has never been in loss since the days it was controlled by Burmah Shell. Instead of selling profitable companies shares, Government should privatize the corporations running in loss instead of giving bail out packages.
@Shahzad: PPL a white elephant with a Profit of more than 50 Billion Rupees annually??? Anyway You cannot compare Pakistan with the Developed world. Privatization in Pakistan Privatization mean easy quick money for the government. But In Europe and America government have a strong liaison with the industry even after the privatization. . The facilitation includes Research and Development facilities where innovative products are developed. In Pakistan it is not the case at all. For example in Europe they have European Research Council and European Institute of Innovation and Technology ( EIT ) that directly facilitates the industry. In Pakistan after the privatization the private expenses of Nawaz family and friends will be met rather than for any productivity in industry.
@Umer: If that is your only logic, then why do you think oil and gas companies have been privatised by other countries in the world ? Truth is that Government should not be running businesses. We should be encouraging private sector enterprise and then the govt can raise revenue by taxing them.
Before all PTI trolls starts bashing i want to clear that it is a rule all over the world that govt responsibility is to facilitate the business not to run the business.And please read about profile of Mohammad Zubair before saying anything.About time we sell these white elephants of our economy which are draining money from public without providing any useful services.Privatisation is the only way to revive the economy look at example of KESC. Institution under govt don't follow merits while hiring once privatised they suddenly starts following merits because shares are at risk.
government officials keep on attributing all good events to people responding to government's prudent policies whereas the fact is that these sales have been successful because they have been successful companies business wise unlike PIA or PSM.
@Umer There is nothing wrong in Privatization. But the government should reinvest this amount in setting up New Exploration company for Oil and Gas and in Research and Development. If this amount will be used to just cover up the Budget deficit then the disaster is about to happen when we would have nothing to sell in the future. Unfortunately PMLN is a Family Limited Government with no vision and i dont expect anything productive from them in this regard.
@Umer: If you can provide us a few billion dollars then please do so. Then we won't have to privatize assets on the orders of the IMF. Otherwise if you don't have a few billion dollars please don't ask us to stop privatization.
Sell the goose that lays the golden eggs.
Petroleum is liquid gold, why are we selling out stakes in that? Who got how much commission in this Mr PM as this is certainly nit in the interest of the country?
This PM will sell all our assets and then we will be totally broke.