PM says Pakistan to privatize all state-owned entities except ‘strategically important’ ones

Pakistan Prime Minister Shehbaz Sharif (left) chairs a meeting of the Cabinet Committee on Privatization in Islamabad, Pakistan on May 14, 2024. (PTV News)
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Updated 14 May 2024
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PM says Pakistan to privatize all state-owned entities except ‘strategically important’ ones

  • Finance Minister Aurangzeb last week said there is “no such thing as strategic” public entities
  • Privatization of debt-ridden state entities is major reform demanded by IMF as Pakistan negotiates new bailout

KARACHI: Prime Minister Shehbaz Sharif announced on Tuesday that his government would privatize all state-owned enterprises (SOEs) except for those deemed “strategically important” or essential ones, state-owned media reported, as Islamabad looks to overhaul its public entities to improve their performance.

The announcement is in direct conflict with Finance Minister Muhammad Aurangzeb’s statement from Sunday in which he said that all public entities would be handed over to the private sector. The minister had said he and Deputy Prime Minister Ishaq Dar were on the same page that “there is no such thing as a strategic SOE.” 

Former finance minister Dar had chaired a meeting of the Cabinet Committee on Privatization on May 10 in which he had said the government’s business would only be limited to essential or strategic SOEs. Dar said while priority would be accorded to loss-making entities, even SOEs who were earning profits would be considered for privatization.

PM Sharif chaired a high-level meeting on matters related to the Ministry of Privatization and Privatization Commission on Tuesday, the state-run Radio Pakistan reported.

“Prime Minister Shehbaz Sharif has announced to privatize all government-owned enterprises with the exception of strategically important state-owned enterprises,” Radio Pakistan said. “The Prime Minister directed all federal ministries to take necessary action in this regard and cooperate with the Privatization Commission.”

Pakistan’s Finance Division has defined strategic entities as those whose functions have significant strategic, security, or social importance in addition to economic values for the country. It has defined essential SOEs as those which are critical for the execution of government policies and where the private sector is unable to assume those functions due to various reasons. 

The Oil & Gas Development Limited (OGDCL), Pakistan State Oil (PSO), National Bank of Pakistan, and hydropower projects are considered strategically important enterprises owned by the government. However, the government has not classified strategic assets for privatization yet.

Pakistan agreed to overhaul its public entities under a $3 billion financial bailout agreement it signed with the International Monetary Fund (IMF) last year, a deal that helped it avert a sovereign debt default in 2023. The IMF has said Pakistan’s SOEs whose losses are burning a hole in government finances would need stronger governance. Pakistan is currently negotiating with the international lender for a larger, longer program for which it must implement an ambitious reforms agenda, including the privatization of debt-ridden SOEs.

Among the main entities Pakistan is pushing to privatize is its national flag carrier, the Pakistan International Airlines (PIA). The government is putting on the block a stake ranging from 51 percent to 100 percent.

Sharif instructed authorities to ensure transparency in the privatization process of all state-owned entities, including the PIA. 

“He directed to televise live Pakistan International Airlines Company Limited’s privatization including bidding and other important steps,” Radio Pakistan said. “The process of privatization of other institutions will also be broadcast live.”

The prime minister was informed that the pre-qualification process for PIA’s privatization would be completed by the end of May. He was told loss-making SOEs would be privatized on priority and that a “pre-qualified panel of experts” is being appointed in Pakistan’s Privatization Commission to speed up the process.

Separately, Aurangzeb chaired a meeting of the Cabinet Committee on State-Owned Enterprises on Monday which was attended by ministers of maritime affairs, economic affairs, housing and works, the governor of Pakistan’s central bank and other officials. The meeting was held to evaluate the performance of the country’s public entities and review the progress of the government’s privatization agenda.

Aurangzeb directed concerned ministries and divisions to submit proposals for the categorization of their respective public entities by May 20. The step is aimed at reviewing the rationale for retaining any commercial functions within the public sector, the finance ministry said.

“The objective is to retain only the essential functions within the public sector & to assign the remaining functions to the private sector,” it said. “At the same time the entities which remain in public sector have to be more competitive, accountable, and responsive to the needs of citizens.”

Participants agreed to foster transparency, efficiency, and sustainable growth within the SOEs, reflecting the government’s dedication to ensuring the optimal utilization of public resources, the ministry said.

Tahir Abbas, the head of research at Arif Habib Limited, considered Pakistan’s largest securities brokerage company, said the conflicting statements between Sharif and Aurangzeb showed lack of coordination between them. 

“There seems lack of coordination between them on the classification of assets for privatization,” he told Arab News. 


Pakistan regulator increases power tariff by 20 percent amid new bailout talks with IMF

Updated 15 June 2024
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Pakistan regulator increases power tariff by 20 percent amid new bailout talks with IMF

  • The Rs5.72 per unit increase, which will take effect from July 1, will provide Rs485 billion in additional revenue to distribution companies
  • Under last bailout, IMF told Pakistan to prevent further accumulation of circular debt in power sector, arising from subsidies and unpaid bills

ISLAMABAD: The National Electric Power Regulatory Authority (NEPRA) on Friday announced an increase of around 20 percent in the uniform power tariff to generate Rs3.8 trillion in funds for 10 power distribution companies (discos) during the fiscal year 2024-25, amid Pakistan’s talks with the International Monetary Fund (IMF) for a new bailout program.
The Rs5.72 per unit increase, which will take effect from July 1 after the government issues a formal notification, will provide Rs485 billion in additional revenue to discos and strengthen the government’s position in securing an IMF bailout in July.
Islamabad is currently locked in talks with the IMF for a longer-term bailout of around $8 billion after the last $3 billion helped Pakistan avert a sovereign default in June last year. Pakistan is expected to formally request for the program in the coming weeks.
NEPRA said the total Power Purchase Price (PPP) of ex-WAPDA distribution companies (XWDISCOs) for FY 2024-25 worked out as Rs3,277 billion, which includes Rs1,161 billion for fuel & variable cost and Rs2,116 billion as capacity charges.
“The capacity charges translate into Rs.6,957/kW/month, based on projected average monthly MDI of 25,348 MW. Thus, the capacity charges works out as around 65 percent of the total projected PPP of XWDISCOs, whereas energy cost is around 35 percent of the total projected PPP,” it said in a circular.
“In terms of average per unit PPP of XWDISCOs on unit purchased basis i.e. before adjustment of allowed T&D losses of XWDISCOs, capacity charges works out as Rs. 17.66/kWh, whereas energy charges are Rs.9.69/kWh, totaling to Rs.27.35IkWh for the FY 2024-25.”
The national average power purchase price works out as Rs.27.00/kWh, according to NEPRA. The generation cost is transferred to the DISCOs as per the prescribed mechanism.
Under the last IMF bailout, Pakistan was told to prevent further accumulation of circular debt in its power sector, arising from subsidies and unpaid bills. For a new program, the South Asian nation will need to implement reforms to reduce costs by improving electricity transmission and distribution, moving captive power into the grid, improving governance, and combating theft.
It will also have to maintain power and gas tariffs at levels that ensure cost recovery, with adjustments made to safeguard the financially vulnerable, through existing progressive tariff structures.
The government has the authority to make adjustments with different rates of increases for various consumer categories without affecting the overall revenue requirement determined by NEPRA.


World leaders join Ukraine summit in test of Kyiv’s diplomatic clout

Updated 15 June 2024
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World leaders join Ukraine summit in test of Kyiv’s diplomatic clout

  • Dozens of Ukraine allies will take part in summit, but China is staying away after Russia was frozen out of proceedings
  • Without China, hopes of isolating Moscow have faded, while recent military reverses have put Kyiv on the back foot

LUCERNE: World leaders gather in Switzerland on Saturday for a summit aimed at pressuring Russia to end its war in Ukraine, but the absence of powerful allies of Moscow such as China will blunt its potential impact.
Dozens of allies of Ukraine will take part in the summit, but China is staying away after Russia was frozen out of proceedings on the grounds it had dismissed the event as a waste of time and had no interest in attending.
Without China, hopes of isolating Moscow have faded, while recent military reverses have put Kyiv on the back foot. The war in Gaza between Israel and Hamas has also diverted attention from Ukraine.
The talks are expected to focus on broader concerns triggered by the war, such as food and nuclear security and freedom of navigation, and a draft of the final declaration identifies Russia as the aggressor in the conflict, sources said.
“The summit risks showing the limits of Ukrainian diplomacy,” said Richard Gowan, UN Director at the International Crisis Group. “Nonetheless, it is also a chance for Ukraine to remind the world that it is defending the principles of the UN Charter.”
Russian President Vladimir Putin said on Friday Russia would end the war in Ukraine only if Kyiv agreed to drop its NATO ambitions and hand over the entirety of four provinces claimed by Moscow — demands Kyiv swiftly rejected as tantamount to surrender.
Putin’s conditions apparently reflected Moscow’s growing confidence that its forces have the upper hand in the war.
Moscow casts what it calls its special military operation in Ukraine as part of a broader struggle with the West, which it says wants to bring Russia to its knees. Kyiv and the West reject this and accuse Russia of waging an illegal war of conquest.
Switzerland, which took on the summit at the behest of Ukrainian President Volodymyr Zelensky, wants to pave the way for a future peace process that includes Russia.
But geopolitical splits over the deadliest European conflict since World War Two have dogged the event, and Zelensky has even accused Beijing of helping Moscow undermine the gathering, an accusation China’s foreign ministry denied.
China had said it would consider taking part, but ultimately declined because Russia would not be there.
“It’s clear that at the moment, in geopolitical terms, for China the special relationship with Russia takes precedence over any other consideration,” said Bernardino Regazzoni, a former Swiss ambassador to China.
Around 90 countries and organizations have committed to the two-day gathering due to take place at the Buergenstock, a mountaintop resort in central Switzerland. The summit has also had to contend with an alternative plan floated by China.
US Vice President Kamala Harris and the leaders of France, Germany, Italy, Britain, Canada and Japan are among those due to attend. India, Turkiye and Hungary, which maintain friendlier relations with Russia, are also expected to join.
Russia, which sent tens of thousands of troops into Ukraine in February 2022, has described the idea of a summit without it as “futile.”
Supporters of Ukraine are marking the Swiss talks with a series of events in the nearby city of Lucerne to draw attention to the war’s humanitarian costs, with a demonstration planned to call for the return of prisoners and children taken to Russia.
European officials privately concede that without support from Moscow’s main allies, the summit’s impact will be limited.
“What can (Zelensky) hope for out of it?” said Daniel Woker, a former Swiss ambassador. “Another small step forward in international solidarity with Ukraine as the victim of Russian aggression.”


Pakistan authorities forecast rains and thunderstorms on Eid Al-Adha, urge caution

Updated 15 June 2024
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Pakistan authorities forecast rains and thunderstorms on Eid Al-Adha, urge caution

  • This year, Pakistan recorded its ‘wettest April since 1961,’ with 59.3mm rainfall and 144 deaths in thunderstorms and house collapses
  • A top UN official this week warned that an estimated 200,000 people in Pakistan could be affected by the upcoming monsoon season

ISLAMABAD: Pakistan’s National Disaster Management Authority (NDMA) on Friday warned of rains and thunderstorms in parts of the country during the three-day Eid Al-Adha holiday starting from June 17, urging citizens to exercise caution.
The authority said rains and thunderstorms were expected in Khyber Pakhtunkhwa, Gilgit-Baltistan, Azad Kashmir, Balochistan, Sindh and Punjab from June 15 till June 19 that could be extended up to June 22.
The forecast was made in light of warmer than average temperatures across the South Asian country of more than 241 million, according to the NDMA.
“Rainfall may trigger landslides, mudslides or falling boulders potentially disrupting roads during this period in Upper Khyber Pakhtunkhwa, Galiyat, Murree, Gilgit Baltistan and State of AJ&K,” it said in an advisory.
“Rainfall may cause flash flooding in local nullahs [in Balochistan]. Hill torrents may be triggered in Sulaiman and the Kirthar Range.”
Isolated rainfall and thunderstorms are expected in Punjab and Sindh provinces from June 20 till June 22.
“Hill torrents may be triggered in DG Khan and Rajanpur. Rainfall with chances of heavy falls may generate flash / urban flooding in municipalities / local nullahs / streams and river tributaries,” the NDMA said.
“Thunderstorms to increase risk of lightning strikes. Electricity / other utility services may get disrupted.”
The authority advised citizens to plan travels to picnic and tourist spots considering weather and traffic conditions.
“Avoid overcrowding picnic and tourist spots and ensure personal safety. Keep children away from nullahs / potholes / drainage lines to avoid accidents,” it said.
“Do not risk crossing any drain or road overtopping with water flow. Wait for flows to normalize and prioritize/ ensure safety.”
Earlier this week, a top UN official warned that an estimated 200,000 people in Pakistan could be affected by the upcoming monsoon season, which is expected to bring heavier rains than usual.
The United Nations, with help from local authorities, has prepared a contingency plan, with $40 million set aside to respond to any emergencies, said Mohamed Yahya, the newly appointed Resident Coordinator and Humanitarian Coordinator in Pakistan.
However, the rains would not be as heavy as in 2022 when devastating floods killed 1,739 people, destroyed 2 million homes, and covered as much as one-third of the country at one point.
This year, the South Asian country recorded its “wettest April since 1961,” with 59.3 millimeters rainfall and at least 144 deaths in thunderstorms and house collapses, according to the authorities.
Pakistan is one of the countries in the world most vulnerable to climate change, in part because of its immense northern glaciers, which are now melting as air temperatures rise. Warmer air can also hold more moisture, intensifying the rains of the monsoon.


Pakistanis complain about high prices of sacrificial animals before Eid Al-Adha

Updated 15 June 2024
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Pakistanis complain about high prices of sacrificial animals before Eid Al-Adha

  • Muslims celebrate Eid by slaughtering cattle, goats and cow to mark the willingness of Prophet Ibrahim to sacrifice his son on God’s command
  • The three-day festival, one of the two most important festivals on the Islamic calendar, will be celebrated in Pakistan from June 17 this year

KARACHI: Pakistanis thronging markets to buy sacrificial cows, camels and goats for the upcoming Eid Al-Adha complained about rising prices of the livestock this week.
Pakistan has been beset by inflation above 20 percent since May 2022. Last year in May, inflation jumped as high as 38 percent as the country navigated reforms as part of an International Monetary Fund (IMF) bailout program.
While inflation has since tapered, at the main cattle market in Karachi, Pakistan’s biggest city, customers said they were still facing higher prices than last year.
“There is no impact of it (inflation slowing down). The prices are higher as compared to last year. The price of an animal that was up to 100,000 rupees ($358) last year is reaching 150,000 rupees ($537) this year,” said a customer, Mohammad Asif.
“It is the government’s claim that they have brought down the inflation whereas it is totally contrary to that here at the market. The prices are like three folds up as compared to last year,” said another buyer, Abdur-Rehman.
Trader Mohammad Chhuttal, who traveled some 540 km (336 miles) from the city of Ghotki to sell his cows and bulls in Karachi, said the impact of last year’s high inflation continued to be felt this year.
Traders said the inflation was hurting the purchasing power of ordinary consumers and noted that there were not only fewer customers in the market compared to last year, but that people would choose smaller animals.
Pakistan is in talks with IMF for a loan estimated to be anything between $6 billion to $8 billion to avert a default for an economy that is growing at the slowest pace in the region.
Pakistan narrowly averted a default last summer thanks to a short-term IMF bailout of $3 billion over nine months.
Muslims around the world celebrate the Eid holiday by slaughtering animals such as cattle and goats as they mark the willingness of Prophet Ibrahim to sacrifice his son on God’s command. The meat is shared among family and friends and donated to the poor.
The three-day festival of Eid Al-Adha, one of the two most important festivals on the Islamic calendar, will be celebrated from Monday (June 17) in Pakistan this year.


Pakistan knocked out of T20 World Cup after rain abandons USA-Ireland game

Updated 15 June 2024
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Pakistan knocked out of T20 World Cup after rain abandons USA-Ireland game

  • Pakistan suffered humiliating defeats against the USA and India 
  • This is the earliest Pakistan have ever gone out of tournament

ISLAMABAD: Pakistan crashed out of the Twenty20 World Cup on Friday after rain abandoned a game between the USA and Ireland and points were split between the two.
While the USA qualified for the Super Eight alongside India from Group A and sealed a place in the 2026 T20 World Cup as well, Pakistan suffered a humiliating exit from the showpiece tournament.
This is the earliest Pakistan have ever been knocked out of a T20 World Cup, having played just three games before their fate was sealed. The Babar Azam-led arrived in the USA with no warm-up games scheduled and most of their practice sessions were canceled due to rain.
Pakistan were punished by the home team in their opening fixture as the USA defeated them in the Super Over. Pakistan later fell apart chasing 120 runs against archrivals India and lost the game by six runs, which disappointed cricket fans back home.
“Cricket is like an escape for us, from our daily routine, from our daily lives, things that cause us problems,” Mohammad Hisham Raja, a 24-year-old fan, said after Pakistan’s loss to India.
“So this is an escape, but there are more problems for us in this one [cricket] as well. So they [Pakistan cricket fans] are feeling sad.”
Cricket in Pakistan is not just a sport but is deeply embedded in the nation’s identity and constitutes a significant source of pride. The performance of Pakistan’s team not only influences the collective mood but also acts as a barometer of national esteem, with victories celebrated as monumental achievements and defeats often taken to heart by the populace.
Following the defeat against India, a lawyer in Pakistan’s Gujranwala city also filed a petition against the national team, seeking treason charges against the players for their lackluster performance in the ongoing World Cup, according to local media reports.
The petitioner expressed deep concern over the disappointing performance of the national cricket team, calling it a waste of money and a betrayal of the nation’s trust.
The loss to India left Pakistan depending on other results, particularly the outcome of the game in Lauderhill between USA and Ireland. Ireland’s win would have kept Pakistan hopes alive, while any other outcome giving USA an unassailable lead over Pakistan on the points table.
Pakistan won their only game against Canada and still have one game left to play against Ireland, who were also eliminated as a result of Friday’s washout.
Pakistan also suffered group-stage eliminations in 2014 and 2016, but reached at least the semifinals on every other occasion. Pakistan along with England have reached the finals for a record number of times and won the title in 2009.