March 23, 2002	Saturday	Muharram 8, 1423

KARACHI, March 22: Federal minister for Privatization Altaf Saleem on Friday said that 74 per cent of KESC shares are being sold in September to an investor who would pump around $500 million during next three to four years in the utility company and will also ensure to bring down power tariffs.

During his visit to Aptma’s principal office the minister said that from April onward a number of companies along with two major banks would be privatized, and then the KESC and OGDC would undergo the same process in September this year.

The minister asked Aptma to take interest in the sell-off of the KESC and try to get hold of at least 10 per cent of the offer so that they could have their director on the utility company’s board. The equity price of the KESC will not be very high, he added.

Similarly, he said the government has already sunk around Rs35 billion in improving the financial health of two major banks being privatized. The government has also made major structural reforms in these banks with the objective that private sector buyer will not have to carry ‘extra baggage’ while running these banks.

The OGDC, which is making huge profits up to Rs6 billion, will also be disposed of in September, which would help the government to get better results in the oil exploration.

He said presently only 24 holes are being made for oil exploration by the OGDC whereas in a country like Canada 1,600 holes are made per annum. If the country manages to explore more oil wells, and achieves 15 to 20 per cent growth, the annual oil bill of $3.3 billion will also come down.

Once the government manages to dispose of loss-making units, he said the budget deficit will also come down, which would have a positive impact on industry’s inflated bills as well as cost of production.

He said the government has managed to reduce the losses suffered by its corporation from Rs100 billion to Rs 65 billion. Presently, he said there is a subsidy of Rs43 billion on gas and Rs15 billion on POL if all these are added including Rs65 billion losses of corporations it come to 35 to 40 per cent of total revenue collection of Rs400 billion.

He agreed with the participants that power and gas prices are distorted and are not market based. Altaf said that presently the industry is footing the gas cost up to 160 per cent which in a way is a direct subsidy to domestic consumers.

However, he said recently there was no increase in gas prices for industrial consumers as the government is gradually moving toward withdrawing a subsidy from domestic consumption. He said that domestic consumers are getting a subsidy up to 52 per cent which has to be withdrawn in phases.