ISLAMABAD: The government on Saturday indefinitely deferred its decision to float shares of the Oil and Gas Development Company (OGDCL) on the open market.

The move seemed motivated by a mixture of political pressure — from inside and outside parliament — and a lacklustre response from potential local and foreign investors.

Finance Minister Ishaq Dar, who chaired a meeting of the Cabinet Committee on Privatisation (CCOP) via video link from Dubai, said Pakistan’s economy had the resilience to get through this difficult phase and that there was no need to go ahead with the deal “in an unfavourable atmosphere”.

The committee, which decided not to go ahead with the disinvestment of the 10 per cent government shares in OGDCL, was briefed by Privatisation Commission Chairman Mohammad Zubair on the outcome of the book-building process, completed early on Saturday morning.

Mr Zubair attributed the stock market’s lukewarm response to three factors: anti-government protests, the Peshawar High Court’s decision to halt the disinvestment process, and a slump in international oil prices. Last week, the opposition in parliament also vetoed the privatisation of OGDCL shares, while the opposition senators staged a sit-in outside parliament to protest the move.

The CCOP meeting was informed by the Privatisation Commission chairman that only 52pc (or 155.5 million) of the 311m government-owned OGDCL shares were picked up by potential investors, yielding only a potential revenue of $342m, against government-expected earnings of $830m.

The ‘offer for sale’ document released by the Privatisation Commission empowers the government to withdraw the offer, and, as such, all those shares on which investors had placed bids during the book-building process, now stood invalid.

Addressing the CCOP meeting, Mr Dar said that under the present circumstances, it was not appropriate or feasible to go ahead with the disinvestment plan. He told the Privatisation Commission that shares should be offered for sale only when the international market situation improved to Pakistan’s advantage.

A press release issued after the meeting said, “The CCOP, at this juncture, unanimously decided not to go ahead with the deal and the decision clearly proves that the disinvestment of OGDCL shares was not being undertaken under any IMF pressure and that future plans for the proposed sale would be chalked out whenever considered appropriate.”

Pakistan Tehreek-i-Insaf MNA Asad Umar, who is also the brother of the Privatisation Commission chairman, disagreed with the impression that his party’s sit-in had any adverse impact on the sale. “The stock market is in boom and the protests have not affected it,” he told Dawn.

Mr Umar said that it was wrong on the part of the government to offer OGDCL shares for capital transaction. Instead of disinvestment, the government should have reined in its non-development expenditures and worked seriously on widening the tax net to generate revenue.

PPP leader Senator Raza Rabbani congratulated OGDCL workers on the success of their struggle, which led the government to abandon its plans to privatise the company.

Meanwhile, the Privatisation Commission has begun the process for the privatisation of the Pakistan Steel Mills and has sought proposals for financial advisory services for the mills.

Published in Dawn, November 9th, 2014