KARACHI: Pakistan has approved the privatization of state-owned entities (SoEs) in its energy sector, including seven percent share of the Oil and Gas Development Company Limited (OGDCL), said an official statement on Friday. 

The Cabinet Committee on Privatization (CCOP) “approved the divestment of up to 7% government owned shares in the OGDCL through public offerings and directed to initiate the process of appointment of financial adviser for the process,” the ministry of finance informed in a statement after the cabinet committee meeting. 

A listed company, OGDCL holds the largest exploration acreage which, as of March 31, 2020, stood at 37 percent of the country’s total area under exploration. 

In 2019, Pakistan had decided to expedite the privatization process of 19 SoEs, including the OGDCL and Pakistan Petroleum Limited (PPL), to retire public debts. The government also approved the divestment of up to 10 percent of the PPL shares through public offerings. 

The CCOP also gave approval for the privatization of Guddu Power Plant (747 MW). 

Experts say the privatization of shares of energy sector companies will bring stability to the country’s stock market. 

“The privatization of public sector will increase the flow of funds, improve transparency and stabilize the market by improving liquidity,” Samiullah Tariq, head of research at the Pakistan-Kuwait Investment, told Arab News. 

On Friday, the OGDCL and PPL shares declined by Rs 2.73 to Rs 114.92 and Rs 3.49 to Rs 100.26, respectively, which equity experts attributed to the news of privatization of these entities. 

The CCOP also approved transaction structures for the privatization of Services International Hotel, Jinnah Convention Center and divestment of up to 20 percent shares of the Pakistan Reinsurance Company Limited held by the government and House Building Finance Company. 

Pakistan’s privatization of lossmaking SoEs started in 1991 and was criticized by various political parties. Between January 1991 and September 2015, the government completed 173 transactions of Rs 650 billion that included the sale of companies from power, oil and gas, transportation, telecommunications, banking and insurance sectors.