KARACHI: Pakistan has decided to expedite the privatization process of 32 state-owned enterprises (SoEs), including the Oil and Gas Development Company and Pakistan Petroleum Limited, to retire public debts, said Federal Minister for Privatization Mohammad Mian Soomro on Friday.
He added that the government hoped to open the bidding process by the end of the year.
“The privatization process has been activated once again. Certainly, we will face challenges but the response so far is encouraging,” Soomro told journalists at a meetup session in Karachi. “The privatization of SoEs will help reduce debt and lead to poverty alleviation.”
The minister also expressed hope that the privatization process would lead to greater investment in the country. “The economic condition of Pakistan is now improving as the trade deficit is reducing and exports are increasing,” he added.
Earlier, the government had added the country’s steel mill and national flag career, Pakistan International Airline (PIA), to the privatization list, though later these were removed from the process. “We want to revive the national assets on a priority basis,” Soomro explained.
He was confident the country would be able to “open the biding process for power plants by the end of the year.”
Secretary Privatization Rizwan Malik informed that the government had narrowed down the list of SoEs for privatization from 65 to 41, adding that 8 entities had been selected under active privatization program in a phased manner. “In the second phase, 17 companies would opt for the privatization process since the government gives prime importance to the economic reforms agenda and the current privatization program is its vital component,” he maintained.
He added that the privatization process was strictly in accordance with the privatization law and the Pakistan Procurement Regulatory Authority (PPRA) rules to ensure transparency in all transactions. “The sales proceeds are utilized for government’s debt reduction and poverty alleviation in Pakistan. It is expected that a substantial amount of sales proceeds will be received as a result of transparent and fair privatization process,” Malik said.
Pakistan’s privatization of lossmaking SoEs started in 1991 and invited criticism from various political parties. Between January 1991 and September 2015, the government completed 173 transactions for Rs 650 billion that included the sale of companies from power, oil and gas, transportation, telecommunications, banking and insurance sectors.
According to the Privatization Commission, about 66 percent of the amount was transferred to the federal government, 28 percent was returned to legal entities whose shares were sold, four percent was used for restructuring expenses associated largely with golden handshakes and rehabilitation, and two percent was used on privatization-related expenditures.
The present political administration of the country hopes that the privatization will bring investment in the country as well as modernize the privatized entities. The investors induct capital, install state-of-the-art technologies and implement best governance practices in the privatized entities.
