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Privatisation policy this week Fuel, gas, telecom and financial sectors'

sell-off to fetch $3 bn

HARIS ZAMIR

KARACHI: The privatisation of state-run companies in fuel, gas, telecom and financial sectors are likely to fetch over $3 billion helping the government to retire its short-term expensive foreign loans due by next year.

The new privatisation policy is expected to be announced this week and the reconstituted Privatisation Commission has indicated that oil and gas sector is the priority, replacing the financial sector. Pak Telecom is ready for privatisation and the government is waiting for the green signal from its financial adviser, Goldman Sachs.

The information available revealed that under the new mechanism cited by the Privatisation Commission, during zero to eight months, Sui Northern Gas, Sui Southern Gas and fertilizer companies' shares are likely to be sold to foreign investors, while in eight to 18 months, the government would sell its stakes in PSO, PTCL and Habib Bank.

"Though at this stage it is difficult to ascertain how much the sale of assets would fetch but the companies' current financial position showed that the selling of the shares might fetch around $3.0 billion," an analyst said.

He added that of the government reach the targets fixed, there are chances that it would become a tool to restore the confidence of foreign investors. The government is likely to achieve the revenue collection target, GDP growth of 4.5 to 4.7 percent and current account deficit to below 3.5 percent of GDP at the end of this fiscal year.

A head of research in the brokerage house said that the ordinance to be announced is expected to give constitutional cover to the new policy. The government is also emphasising IPOs of state owned units. This would serve the following objectives, broaden shareholding in Pakistan, give a floor price when they go out to sell management stake and give indirect constitutional cover. Once a unit has general public holding, it would be difficult for the next government to reverse the privatisation process.

Altaf Saleem, Chairman of Privatisation Commission, in a recent visit to the Karachi Stock Exchange (KSE) said that the new programme of privatisation would initially focus on selling state-run units in the oil, gas and financial sectors.

He pointed out that the commission plans to offload some shares of fully state-owned companies on stock exchanges first, followed by a sale of a majority stake to a strategic investors. Saleem said that commission would appoint people from the private sector in government-owned companies in order to improve the operation of the companies.

The privatisation plan has been approved by the Ministry of Finance and now been sent to the Chief Executive for final approval. In the first phase (till end 2000) of privatisation would include offering strategic control to the private investors which are working interests of government in oil and gas fields, minority interests in Attock Oil Refinery and Pakistan Oil Fields, non-core assets (meter making) and LPG of Sui South and Sui North, 25 percent equity of MCB, Ghee Corporation of Pakistan and others including state-owned fertilizer and engineering companies.

In the medium-term plan incorporating phase 2 (till end of 2001), units that are planned to be privatised are: all the remaining assets of the oil and gas sector, including Sui twins, power distribution companies including KESC and Faisalabad Electric Supply Corporation, the telecom monopoly of PTCL and banks, including Habib Bank and United Bank Limited.