ISLAMABAD (November 14 2002) : The Cabinet Committee on Privatisation (CCOP) outlined a calendar for privatisation of various entities up to April next year, which includes seven transactions.
The CCOP, which met here on Wednesday under the chairmanship of Finance Minister Shaukat Aziz, discussed the future calendar of privatisation of major state-owned enterprises which would be taken to market between November, 2002, and April, 2003.
These include Pakistan State Oil, National Investment Trust Ltd, Oil and Gas Development Company Ltd, Pakistan Telecommunication Company Ltd, Habib Bank Ltd, Karachi Electric Supply Corporation and Pak-Arab Fertiliser, for which the preparatory work has been completed and these transactions are now ripe for bidding.
PSO, NITL and HBL were at most advanced stages and the pre-bid meeting for PSO transaction has been scheduled for November 15, 2002.
Earlier, the board of privatisation commission met, which was informed by the privatisation minister, Altaf Saleem, that out of total of Rs 36.2 billion earned during the period from October 1999 to October 2002, an amount of Rs 9 billion had been transferred to the government and $125 million was available for transfer to the government. In addition, an amount of Rs 14 billion had been transferred to State Bank of Pakistan and over Rs 3 billion to other entities entitled to the proceeds under the law.
The board was told that the sale of shares of Pakistan Oilfields Ltd through stock exchanges had fetched Rs 220 million and remaining 24.1 million shares of MCB had been sold through the same process for Rs 640 million.
The CCOP was informed that the privatisation programme was moving ahead with full tempo after processing 82 transactions to market in the last 3 years resulting in achieving proceeds of Rs 36.2 billion. This programme needed to be taken forward with full commitment so that major transactions could successfully be concluded in the period between November 2002 and April 2003, the committee was told.
The CCOP appreciated the strenuous preparatory work that Privatisation Commission had to undertake before an entity or a business concern can be offered for sale to the prospective investors. The process starts with the identification of the entity to be privatised.
A Financial Advisor (FA) is then selected and appointed to submit the technical and financial proposals for making the entity saleable and propose a transaction structure for approval. FA's job includes removal of legal encumbrances and restructuring of the entity. The Financial Advisor for this purpose carries out due diligence in depth before submitting recommendations.
Enactment of a regulatory framework and sectoral reforms was done to ensure level playing field and competitive framework in the post privatisation period are carried out. The next important step is valuation of property/assets, which serves as the benchmark, or indication of a fair value. Interested parties are then called to pre-bid meetings where the issues they raise are clarified. Bidding is the last stage after which a legal contract is entered into with the successful bidder regarding payments, handing over of the assets.
The CCOP noted that the pipeline of privatisation was almost empty when this government took over. The Minister for Privatisation Altaf M. Saleem and his team had done commendable job in bringing all these important transaction to maturity going through all steps indicated above in a short period.
The CCOP approved the package for recovery of balance sale price for certain privatised enterprises.
The Committee also approved sale of shares of Kohat Cement and DG Khan Cement companies through Stock Markets. CCOP gave go ahead for the privatisation plan of ICP SEMF in continuation of Lot-A & B of ICP Mutual Fund and noted with satisfaction that the first pre-bid meeting with the prospective bidders for PSO was being held on November 15, 2002 and pre-bid meeting for ICP (SEMF) on November 16, 2002.
The CCOP was informed that to broad based ownership of shares and to provide depth to the stock markets, the government had divested shares of Muslim Commercial Bank and Pakistan Oilfields Ltd worth Rs 800 million through CDC.
The meeting was attended by the Federal Ministers for Industries, Production & Commerce, Labour and Manpower, Privatisation, Deputy Chairman Planning Commission, Chairman BoI and other senior officers of Ministries and Divisions concerned.