ISLAMABAD - The PML-N government is compelled to disinvest the shares of Oil and Gas Development Company Limited even at lower prices to build foreign exchange reserves on the direction of IMF, which linked the two tranches worth $1.1 billion with OGDCL’s shares sale.

Sources informed that the government could not afford to further delay the process of OGDCL capital market transaction as Pakistan could not receive two tranches worth of $1.1 billion from IMF (International Monetary Fund) without completing the aforesaid process. The prolonged sit-ins and decline in international oil prices had resulted in reduction in revenue to be generated from OGDCL capital market transaction.

“The government desperately needs dollars to build its reserves as was demanded by the IMF. Therefore, it is going for disinvesting shares of OGDCL”, said Dr Ashfaque H Khan, an eminent economist and dean at NUST School of Social Sciences and Humanities. He apprised The Nation that government would have to complete two transactions, OGDCL shares disinvestment and Sukuk bonds auction, for receiving two tranches worth of $1.1 billion from IMF.  The process of disinvesting the 7.5 per cent shares of OGDCL at London Stock Exchange would be completed today (November 7). While another 2.5 per cent shares would be disinvested at domestic level.

Sources informed that government is offering discount on the share value of OGDCL’s share to the investors, which would reduce its earnings. The Cabinet Committee on Privatization (CcoP) the other night accorded approval for a floor price of Rs. 216/- per share as recommended by the Privatization Commission after detailed deliberations.

The government is going for the capital market transaction of OGDCL at a time when its share price is constantly declining due to the dip in oil prices in international market from last few months. The OGDCL’s shares price closed on 221.6 on Thursday, which was Rs227.77 on October 31, according to the Karachi Stock Exchange website.

The government’s revenues already reduced due to the delay in OGDCL’s shares disinvestments because of the sit-ins. Earlier, the government was expecting $815-850 million in receipts by selling 7.5% shares of the company since its shares were being traded for Rs250. However, on the basis of the current value of the share, the anticipated earnings will be around $700-$730 million.

It is worth mentioning here that the government had delayed the process of disinvesting OGDCL shares due to the sit-ins of PTI and PAT and stay order issued by Peshawar High Court. Earlier, the government planned to complete the OGDCL’s shares disinvestments process in September 2014, which now would be completed in November.

Meanwhile, Shahid Khaqan Abbasi on Thursday informed the Senate Standing Committee on Petroleum and Natural Resources that government is having 70 percent shares in OGDCL in which only 10 percent shares would be disinvested. The government is expecting to generate $600-700 million from this process, he said and added that it is not happening for the first time as government had already disinvested its shares in the past.