KARACHI (January 17 2004): Privatisation and Investment Minister Dr Abdul Hafeez Shaikh said that the government will sell shares of Sui Southern Gas Company after Eid holidays to help in completing the transaction in efficient and speedy way.
The minister on Friday chaired the first road show to sell Sui Southern Gas shares through stock market aimed at passing on the benefits of the privatisation to people and deepen the capital market operations.
He said that the share price fixed at Rs 26 per share was a good opportunity for the general investors as the prevailing market price was Rs 33 per share and the profit likely to be realised would be around 27 percent.
“We haven't fixed any date to sell SSGC shares through the stock market, it all depends upon the stakeholders to ascertain the right date to sell this scrip,” he added.
The minister said that a private mutual fund would sell its shares next week through the stock market and it would suit stakeholders that the SSGC shares hit the market after Eid holidays, he said.
Hafeez said that the investors have reaped a rich harvest through the sale of National Bank of Pakistan (NBP) and Oil and Gas Development Company (OGDC)shares, because the equities were offered at Rs 46 and Rs 32 per share and they were getting the premium as per the market price, which was around 17 percent and 62 percent respectively.
The first year of the democratic government had proved fruitful and “I am calling it 'privatisation year' because the proceeds during the period amounted to Rs 40 billion,” he said.
The government, following the completion of SSGC transaction, has planns to sell shares in Pakistan International Airlines Co, Pakistan Petroleum Ltd, and Kot Addu through local bourses.
OGDC divestment is a big step towards deepening and broadening of the stock markets and the heavy response from the investors gave a clear indication of excess liquidity available.
An encouraging factor for the markets in this instance was the participation of all the categories of individual investors, including housewives and pensioners; a large proportion of them were first time investors for whom this investment was a learning experience, and many of these investors might continue to invest in the stock market, increasing the investor base significantly.
Hafeez said that the main objective of the privatisation was to encourage small investors. To boost their participation, the Privatisation Commission would first entertain the applicants for 1,000 shares, followed by 2,000 and then 3,000.
SSGC Deputy Director Hasan Nawab, in a presentation, said that the company over the last five years has shown tremendous growth in its after tax profit, which has moved up from Rs 950 million to Rs 1.448 billion in 2002-03.
Moreover, the earning per share from Rs 1.88 in 1997 rose to Rs 2.16 last year. He said that following the completion of Rs 34 billion expansion plan, the supply of gas would grow at least 50 percent in the coming years to 1,800 million cubic feet per day from 1,200 million cubic feet per day.
Out of the Rs 34 billion plan to increase infrastructure, Rs 19 billion was expected to be raised from the banks, Rs 3 billion from the government grants and Rs 9 billion through company's internal cash generation.
He said that the total gas demand was expected to increase from 1,019 mmcfd to 1,596 mmcfd by 2007-08, a 57 percent increase from the current levels.
The power sector would lead the growth in demand with an 87 percent increase to 1,018 mmcfd owing to a shift from oil because of price advantage for gas.
General industries, commercial and domestic demand would also show volume increases of 23 percent, 21 percent and 16 percent respectively owing to the GDP growth and increased gas penetration.
Transportation industry was anticipated to grow by 150 percent, but the total volume would still remain low at 20 mmcfd. Fertiliser and cement sector demand would remain constant at 55 mmcfd and 10 mmcfd.