ISLAMABAD, Dec 29: The International Monetary Fund (IMF) has given deadline of May 31, 2002 to the government to privatize Pakistan Telecommunication Company Limited (PTCL) and the United Bank Limited (UBL).

According to the officials concerned, all necessary arrangements were currently being made to make sure that both PTCL and the UBL were disinvested by May 31.

A decision has been taken to disinvest 20 to 26 per cent shares of the PTCL along with transfer of management to a strategic buyer. The Privatization Commission (PC) is hoping to collect 700 to 900 million dollar by partially privatizing the PTCL which is one of the major profit making state sector enterprises. Earlier, 10 per cent shares of the company were sold in early 1990s, which earned 850 million dollar.

Officials said that according to their schedule, PTCL and the UBL should be privatized in the first quarter of 2002.

So far five Expressions of Interest (EOIs) had been received by the Privatization Commission for disinvesting the mighty PTCL. But the officials of the PC were hoping to have two more competitors to join the race for winning over the PTCL. The decision had reportedly been taken on December 8 to associate at least two more UAE-based companies/groups.

Three international companies had been pre-qualified on December 8 to disinvest 49 per cent shares of the UBL along with transfer of management. And now the process of due diligence of the three companies was currently being conducted so that their bidding could take place in time. The Union Bank, a foreign consortium comprising Muslim Commercial Bank (MCB) and an Abu Dhabi-based company having joint venture with Best Way Cement is one of the groups that had been pre-qualified to take part in the bidding of the UBL. officials said that the UBL transactions would give a big boost to disinvestment of state enterprises during the next few months.

They said that preparatory steps towards privatizing and restructuring of state-owned enterprises including launching of the process of privatization of the telecommunication company, one major state owned bank and the government interests in nine oil fields had been initiated with new vigour in order to manage considerable foreign exchange by disinvesting them as quickly as possible. Numerous expressions of interest were received in each of these cases, and closure was envisaged by December 2001.

However, recent events brought the process to a temporary halt. The drought, oil prices and insufficient tariff adjustments prior to 1999 added to the already deteriorating financial conditions of Water and Power Development Authority (Wapda) and Karachi Electricity Supply Corporation (KESC).

The process of corporatizing Wapda’s successor companies with the technical support of the World Bank and with the financial support of the Asian Development Bank (ADB), preparation for the privatization of the KESC had been launched.

Pricewaterhouse Cooper — the financial adviser of the KESC — had been appointed jointly by the Privatization Commission and the Asian Development Bank (ADB) to finalize the deal. The KESC is almost 99 per cent government-owned company whose most of the debt had been converted into equity.

The government was also planning to change the law so that future buyer of the KESC should share its profits with the consumers. The government intends to prescribe certain limit of profit and if that limit is exceeded, the new buyer will have to offer certain percentage of this profit to the electricity consumers.