ISLAMABAD-The federal government on Tuesday formally announced to defer the privatisation of 6 public sector entities and 28 state owned properties till next fiscal year, which would give a hit of Rs400 billion in terms of non-tax collection during ongoing financial year.

Federal Minister Mohammedmian Soomro chaired a meeting, attended by Secretary Privatization Commission and other concerned officers, to review progress on privatisation program with special focus on some of the priority transactions. In the subject meeting targets were also set for the FY 2020-21.

It was apprised to the minister that substantial progress was made to conclude the transactions including National Power Parks Management Company Limited, (NPPMCL), SME Bank, Jinnah Convention Centre, Services Int’l Hotel (SIH) and sale of 28 properties within current FY but due to outbreak of COVID 19 the timelines had to be rescheduled.

Pakistan’s economy is facing severe setback due to the coronavirus as government had projected decline in exports, tax collection and foreign remittances during the current fiscal year. However, the government would now face massive shortfall in non-tax collection, which was hope for the economic team to curtail the budget deficit after facing shortfall in taxes.

The government had projected to generate Rs150 billion through privatization programme in budget for the year 2019-2020. However, later, it had decided that privatization of 6 public sector entities and selling 28 government owned properties will generate around Rs400 billion before June 2020.

The PSEs included, SMEs bank, First Women Bank, two RLNG power plants including Haveli Bhadar Shah and Balloki, government’s 18.5 percent shares in Mari Petroleum Company Limited as well as Services International Hotel Lahore and Jinnah Convention Centre Islamabad.

According to the Privatization Commission, a revised schedule has also been shared with Prime Minister (PM) office. It was apprised to the Minister that despite lockdown situation transactional activities were continued through technological means and prequalified bidders for NPPMCL remained engaged and they were provided necessary information and assistance in completion of buyer side due diligence. However, it was noticed that pandemic situation has changed the overall macroeconomic outlook of the global economies where Pakistan is not an exception and this has affected overall privatisation program.

It is worth mentioning that the transaction structure of Pakistan Steel Mills is under consideration in the Privatisation Commission and will be discussed in the meeting of Transaction Committee on Thursday, 14th May. Federal Minister reiterated that revival of PSM is also one of the priorities of the govt to minimize losses being borne out of public exchequer.

The minister was updated that financial advisor hired for the purpose has completed due diligence of the entity and reports received in this regard are under review by concerned stakeholders. Based on due diligence FA has formulated a draft transaction structure for inviting EOI from the potential investors. The draft transaction structure is to be discussed during meeting of the transaction committee in this week. TC structure will be placed with PC board and CCOP for approval. The minister urged the concerned to expedite the process for early conclusion of the revival plan of PSM.

Moreover, the auction of 28 properties owned or controlled by the federal government will be conducted as and when Covid 19 situation gets better. The Due Diligence Reports of Higher Electrical Complex’s (HEC) transaction are being finalized and transaction structure is being developed by the FA Consortium.

The federal minister however impressed upon the concerned staff to keep up the pace and complete all requisite formalities leading to successful completion of transactions once market conditions are improved and normalcy rebound in the investment landscape.