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Privatisation of eight companies to be postponed

ISLAMABAD - Pakistan government has decided to postpone the privatisation of eight major companies including Pakistan State Oil (PSO) because of increasing political uncertainty and subdued business climate in the country.

Informed sources said that the privatisation of Oil PSO, Pakistan Petoleum Limited (PPL), Oil and Gas Development Company Limited (OGDCL), Sui Northern Gas Pipeline Limited (SNGPL), Sui Southern Gas Company (SSGC,) Kot Addu Power Company (KAPCO) National Bank Pakistan (NPB) and Habib Bank Limited (NBP) have been removed from the active list of privatisation during 2008-09.

While the fluctuation in oil prices was given the major reason for delaying the disinvestment of PSO, the grip security situation has become the problem for selling the remaining shares of the NBP and HBL during the current financial year .

Earlier, the Privatisation Commission (PC) had set a $1.8 billion privatisation target for 2008-09. Under these circumstances, sources said, these entities would not fetch a better price and therefore the PC has changed its mind to bring these transactions in the market.

"The regulatory regime of oil and gas entities are still not strong and they have problems of domination and monopoly," another source said adding that the Senate Committee on petroleum and natural resources was also opposing these transactions.

He said that it was not the right time for introducing major transactions and that market conditions needed to be improved to accelerate the process of privatisation in the country.

However, a senior official of the Privatisation Commission when contacted said that 16 other transactions worth Rs52 billion were being finalised during 2008-09. He said Small and Medium Enterprises (SME) Bank, Hazara Phosphate Limited (HPL), Heavy Electric Complex (HEC), hotels of Pakistan Tourism Development Corporation (PTDC) and the National Power Construction Company (NPCC) will be privatised next month. “These four transactions are important for which arrangements have been made to disinvest them in September 2008,” he said.

“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 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 adding the issue was still in the Supreme Court and was required to be cleared by the CCOP.

However, the official did not think that the government would take the issue to the Council of Common Interest (CCI).

The official also said that labour issue was also forcing the government not to take up the privatisation of steel mills at least during the current financial year.

Prime Minister’s Adviser on Industries and Production Manzoor Wattoo after visiting the mills last week, is believed to have submitted a report to the premier Yousuf Raza Gilani, opposing 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 (PSMC), coal & salt mine companies, Pakistan Machine Tool Factory, Services International Hotel, Printing Corporation of Pakistan (PCP) and the remaining 62 per cent shares of Pakistan Telecommunication Company Limited (PTCL) — were also not expected to come up for disinvestment during the first three months of 2008-09.