ISLAMABAD: The divestment of government shares in two major units – Pakistan International Airlines (PIA) and Oil and Gas Development Company Limited (OGDCL) – planned for current fiscal year has been delayed significantly due to restructuring and procedural reasons.

Minister of State and Chairman Privatisation Commission Muhammad Zubair told journalists on Wednesday that sale of core business of PIA was now being targeted for June 2015 instead of December 2014. Before privatisation, the heavily overstaffed and indebted national carrier would be divided into at least five subsidiaries for managing surplus employees.

He said the sale of OGDCL shares was also likely to be delayed until September this year or next fiscal year due to regulatory and procedural requirements, but a final decision would be taken in 10 days.

The government had planned to complete the sale of PIA in December 2014 and that of OGDCL by June 2014 under an agreement with the International Monetary Fund (IMF).

Zubair disclosed these delays on the day Pakistan started in Dubai discussions with the IMF for third review of $6.78 billion bailout package secured in secured in September 2013.

Explaining the restructuring and transaction structure of the PIA, the privatisation chief said the core business of PIA – planes, airline routes and staff required for running of planes – would be transformed into a new subsidiary of PIA Holding Company that would be free of all losses and liabilities with a clean balance sheet.

He said the bifurcation of PIA assets and various businesses like kitchens, hotels and liabilities and regulatory verification of their balance sheets and meeting mandatory requirements for transparency was quite a lengthy process and hence it would not be possible to take PIA to sale counter by the deadline of December this year.

He expected about 50 per cent shares of the core PIA to be sold early next year. Simultaneously but separately, the second PIA subsidiary comprising two luxury hotels – Roosevelt in New York and Scribe in Paris – would also be sold. The proceeds of these two entities would be used to pay off some of the liabilities of the company.

He said a number of subsidiaries would be carved out of PIA holding company and would be sold one after the other while dealing with the staff in gradual manner. Some of the surplus staff would be offered voluntary separation scheme.

He said talks were also going on with friends in Dubai and Qatar for placement of some of the PIA surplus staff for next football World Cup in Qatar and 20-20 cricket matches in Dubai.

He said the PIA’s two hotels in New York and Paris were expected to fetch $600 million. When reminded that some parties had earlier offered $1 billion for Roosevelt New York, he said he had to manage these expectations.

Talking about OGDCL, the minister said the 10pc company shares at London Stock Exchange required oil and gas reserve certification and financial results of up to April 2014 that was a lengthy process and may not be completed by mid-May.

Then the regulators in London required at least four weeks for approvals but then Europe remains almost close for business during August and hence the entire exercise of financial results and oil and gas certification would need to be done again. He expected $850 million from sale of 10 per cent shares of OGDCL.

Zubair said the divestment of 10 per cent shares of Pakistan Petroleum Limited (PPL) through local stock exchanges would be completed by third week of June this year with expected proceeds of Rs20-25 billion.

He said the government planned sale of 10pc shares in United Bank Limited was also expected to be completed before June this year. He said these shares would be sold to biggest capital market players in the world through a book building process.

Zubair said he had advanced the sale of Lahore Electric Supply Company to follow Faisalabad Electric Supply because he felt there were buyers for various distribution companies.

He said the PC was getting very positive response from investors to take over various distribution and generation companies because it was going to offer a great business opportunity.