KARACHI, Jan 15: From the look of it privatization process appears to be gaining momentum with the Privatization Commission (PC) promising to sell some of the big ticket companies during the current financial year. But promises are not always kept and the target dates almost always get to be pushed ahead.

Parish the past, but in recent months, the divestment of 5 per cent of state-owned equity in Kot Addu Power Company (Kapco) through the stock exchanges announced for December 2004 did not materialize; the transaction was then set to get through in January, but almost to the mid of the month, no offer for sale or date of IPO has been announced. Investors are waiting for the road shows.

If the government were to go for divestment of its equity in major corporations and banks, such as PIA, UBL, Pakistan Steel; NIT and State Life Insurance Company though the stock exchanges, there could be no better time than this when the bulls are relentlessly charging to take the KSE-100 index level to an unfathomable 7,000 level and the prices of stock are passing through the roof.

The liquidity at the market is strong and a lot of money is chasing a few shares, which is why small investors have made fortunes out of their investment in public sector IPOs of Oil and Gas Development Company (OGDC) and Pakistan Petroleum Limited (PPL). In the process, the government has also secured the asking price for those stocks.

Between 1991 to end-November 2004, the Privatization Commission has been able to raise Rs143 billion through the sale of 144 units. The commission is expected to give a briefing on the privatization of Allied Bank Limited to the National Assembly's Standing Committee on Sunday.

Could that be the proper time and place for the PC to disclose how and where the staggering sum of Rs143 billion (that the successive governments) received as proceeds from privatization were applied?

One reason that the Privatization Commission has not been able to keep up with its sell-off agenda could be that the commission has always in its enthusiasm put too much on the plate.

On the agenda for strategic sale are now the controlling interests in Pakistan Refinery Limited; Karachi Electric Supply Corporation and Pakistan State Oil.

The sale of PSO was first announced two years ago in 2002, but the process continued to be pushed ahead so many times that many people had started plugging their ears when someone talked about the privatization of the biggest oil marketing company.

It could, however, be different this time, for the commission has re-invited expressions of interest (EoIs) and the excitement over the transaction has begun after a lull of almost 6-8 months. The PC has set March 4, 2005 as the last date for the submission of EoIs.

The market is expecting good response owing to keen investor interest in the oil and gas sector. A pure oil marketing company, PSO controls almost 65 per cent of the market share, with competition mainly coming from Shell Pakistan.

The PC aims to divest 51 per cent shareholding of the company along with management control. The government directly holds 26 per cent shareholding of the company, and another 25 per cent through two state owned mutual funds.

The government is also putting up a serious face on the privatization of KESC. Murad Ansari, analyst at stock brokerage firm, KASB, says that after a prolonged discussion with the proposed bidders, the Privatization Commission (PC) has finally been able to bring KESC to the bidding table.

According to the announcement by the PC, the bidding for KESC will be held on February 4, 2005. International Power of UK, Saudi Kunooz Group and Hassan Associates are among the main contenders for the government stake in KESC.

The PC aims to divest between 51-73 per cent of government's shareholding to the successful bidder along with the transfer of management control. The government currently holds around 99 per cent of KESC's total shareholding.

KESC, an integrated electricity generation and distribution company, is the second largest government owned entity in the power sector and holds the franchise of supplying electricity to the city of Karachi.

KESC's own installed capacity is 1900MW, but barely 1200MW of installed capacity is operational. One of the major problems that KESC has been facing over the last 5-6 years has been the soaring transmission and distribution losses, which have been as high as 41 per cent.

The government has tried to seek firm commitment from the new bidder to invest up to $400-600m over three years in the transmission and distribution infrastructure.

Mohammad Hamza, analyst at Taurus Securities observes in respect of privatization of KESC that the government intends to hold 25 per cent and Asian Development Bank had shown interest in acquiring 6 to 7 per cent of the shareholding.

"The government wishes to remain on the board to ensure that the new management does not act in conflict with the interest of consumers of the utility", reckons the analyst.

Murad Ansari says that the privatization process of Pakistan Telecommunication Company Limited (PTCL) has generated a good deal of excitement owing to the strong interest in the transaction coming from four major regional /international operators.

Sing tel, Kuwait Mobile Telecommunications Co., Emirates Telecommunication Corp., MTN-International Pty. Ltd of South Africa, and Saudi Oger. The Government is aiming to divest up to 26% of the shareholding of the company along with management control to the new bidder.

Currently 88% of PTCL's shareholding is in the hands of the State. PTCL is the largest fixed line telecom company in the country, which also has a 1.6mn cellular subscriber base through its wholly owned subsidiary, Ufone.

PC has fixed Jan, 28, 2005 as the last date for submission of Expressions of Interest (EoI) and it expects to hand over the company to the new management by the end of March this year.

In regard to the sale of controlling shares in National Refinery Limited (NRL), the PC received a record number of 29 parties who submitted expressions of interests (EoIs).

They include both local and international players. NRL is among the largest fuel and lube refineries in the country. The company has the distinction of being the only lube refinery in Pakistan.

Major contenders for government stake in NRL include Al Tawairqi Trading & Construction Limited; Al-Ghurair Investment (LLC); ALP Group Limited; KPC Holdings (Aruba); AEC; Lukoil International Trading and Supply Company, Attock Oil Company Limited; Fauji Foundation, Engro Chemical Pakistan Limited, Shell Pakistan Limited, and Pakistan State Oil.