ISLAMABAD, Aug 4: Eight major privatisation transactions, planned for 2008-09, have been postponed indefinitely due to growing political uncertainty and unfavourable investment climate in the country.
Sources said that the privatisation of PSO, PPL, OGDCL, SNGPL, SSGC, Kapco, National Bank of Pakistan (NPB) and Habib Bank Limited (HBL) have been removed from the active list of privatisation during the current financial year.
While the fluctuation in oil prices was given the major reason for delaying the disinvestment of oil and gas entities, the grim security situation and the negative market sentiments were cited to be the major problems to sell the remaining shares of the NBP and HBL during 2008-09 through Global Depository Receipts (GDR).
Earlier, the Privatisation Commission (PC) had set a $1.8 billion target for privatisation proceeds for 2008-09. But now the government believed that under the present circumstances, these mega entities would not fetch a better price, therefore, the commission should not bring them in the market.
The regulatory regime of oil and gas entities is still not considered strong and they have problems of domination and monopoly. Also, the Senate Committee on Petroleum and Natural Resources is opposing these transactions.
However, a senior official of the Privatisation Commission told Dawn that 16 other transactions worth Rs52 billion were being finalised to be disinvested during 2008-09. These also include Small and Medium Enterprises Bank, Hazara Phosphate Limited (HPL), Heavy Electric Complex (HEC), hotels of Pakistan Tourism Development Corporation (PTDC) and National Power Construction Company (NPCC), which will be privatised next month.
“A very robust plan has been finalised to complete 16 transactions within this financial year despite various problems,” the official said.
Responding to a question, he said that the privatisation of Pakistan Steel Mills was being reviewed after its balancing, modernisation and replacement (BMR) and the increasing steel prices. “Since the Mills is no more in red and has started earning profit, its privatisation was not currently being considered”, he said.
He further said that the issue was still in the Supreme Court and was also required to be cleared by the Cabinet Committee on Privatisation. However, the official did not think that the government would take the issue to the Council of Common Interests (CCI) for clearance.
The official said that the labour issue was also forcing the government not to take up the privatisation of the Steel Mills at least during the current financial year.
Prime Minister’s Adviser on Industries and Production Mian Manzoor Wattoo, after visiting the mills last week, is believed to have submitted a report to the premier urging him not to allow the privatisation of the mills.
Six other transactions -- Faisalabad Electric Supply Company, Jamshoro Power Company, 10 per cent Initial Public Offering (IPO) of Pakistan Steel Mills Corporation, Coal and Salt Mine Companies, Pakistan Machine Tool Factory, Services International Hotel, Printing Corporation of Pakistan and the remaining 62 per cent shares of Pakistan Telecommunications Company Limited were also not expected to come up for disinvestment during 2008-09.
Other mega transactions involving airports, shipyards and other companies, entities of engineering, banking and insurance were also being delayed.
The government is expected to encourage Voluntary Separation Scheme in various state sector enterprises by offering 50 per cent funds so that no organisation to be privatised should remove its employees for a period of one year.
Ever since privatisation process started in 1991, $9 billion had been collected as part of the privatisation proceeds. During this period, the PC had completed a total of 166 transactions.