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ISLAMABAD: With the completion of two transactions during the last month of outgoing fiscal year, the PML-N government has decided to embark on a massive privatisation drive during the fiscal year 2014-15.
During this month, the government disinvested its shares in United Bank Limited (UBL) and Pakistan Petroleum Limited (PPL), generating Rs53.3 billion in aggregate.
“We have devised [privatisation] plan for the next 12 months. It’ll be revealed to the next board meeting of the Privatisation Commission (PC) to be held soon,” PC Chairman Muhammad Zubair told a news conference here on Saturday.
“Pakistan desperately needs cash today for investments. This money will be used for debt retirement and poverty alleviation,” he said.
He said the government would now privatise power sector firms, particularly the power distribution and generation companies. The plan is for both the capital market and strategic sale, he said.
About PIA, he said that financial advisers have presented comprehensive presentations to the commission in this regard.
Elaborating the privatisation plan for the coming fiscal year, Zubair disclosed that 10 per cent of the government’s 80pc shares in the OGDCL would be off-loaded by the end of September, for which financial advisers have been appointed.
Giving details of the PPL transaction, he said the disinvestment of 5pc shares in PPL generated on a premium of Rs15.3bn, which reflected strong confidence in the government’s economic policies. “In less than 15 days, this is the big capital market transaction,” remarked Zubair.
The Privatisation Commission chairman said the government initially offered 70 million shares, but due to extraordinary demand the number of shares was raised to 143m and sold at Rs219 reflecting a premium of little over Rs1bn compared to the floor price of Rs205.
CCoP’s endorsement
In the meantime, the Cabinet Committee on Privatisation (CCoP) in its meeting here on Saturday approved the strike price of Rs219 per share to sell off 5pc government shares in PPL.
Finance Minister Ishaq Dar, who is currently on an official visit to Saudi Arabia, said it was the first time in the history of Pakistan that offers on premium have been received on the sale of government share in any entity.
In a message, Dar said that the transaction of PPL shares would send a strong message to both international and domestic investors on the state of economy and the investment opportunities in Pakistan. “Investors’ confidence in the economic policies of the government has been reflected in both bond and equity market.”
Zubair said the transaction of PPL was carried out in a very difficult environment, mainly because of current security situation. At one stage, it was suggested to postpone the transaction, but the government decided to go ahead. “If we had postponed, it would have tarnished the image of Pakistan, and our reputation would have been on stake,” he said.
Published in Dawn, June 29th, 2014
