ISLAMABAD - The government is all set to privatise 20 public sector entities during the ongoing financial year 2013-2014 while banking institutions, including United Bank Limited (UBL) and Habib Bank Limited (HBL), would be privatised in the first stage, likely in next few months.

“The government would offload the shares of such institutions whose management control is already in the hands of the private sector. Shares of UBL, HBL and six other institutions would be offered for offloading in the first stage, likely in next few months,” said Board of Investment (BOI) Chairman Muhammad Zubair, talking to The Nation on Tuesday. He was of the view that the government would privatise some 20 state-run enterprises before June 2014.

Sources in the Finance Ministry say that Pakistan and International Monetary Fund (IMF) recently agreed that shares of some banking institutions, OGDC (Oil and Gas Development Corporation) and Pakistan Petroleum Limited (PPL) would also be offloaded in local as well as international markets during the first phase of the ongoing financial year.

Pakistan has told the IMF that privatisation of two major loss-making institutions, PIA and Pakistan Steel Mills, is not immediately possible as it may take more than one year.

The privatisation of the two ‘giants’ might start in December 2014 or January 2015. The government fears to face political pressure if it goes for privatisation of PIA and PSM in the first stage, so it has decided to privatise them at a later stage, the sources added.

Muhammad Zubair said the government would ensure 100 percent transparency in the privatisation process of 68 state-run enterprises, including PSM and PIA. Defending the privatisation decision, he said the government could not afford to waste Rs 500 billion of the country’s total tax revenue every year on these loss-making entities.

“The government has initiated the privatisation process on three fundamental points – protection of workers’ right, 100 percent transparency and regulatory framework – to review the post-privatisation matters,” said Zubair. He reiterated the government could not afford to give Rs 500 billion annually to the loss-making public sector entities (PSEs), which could be utilised for the welfare of the masses after their privatisation.

On a question about IMF’s direction regarding privatisation of PSEs, the BOI chairman said, “It is a fact that IMF has asked for the privatisation of loss-making state-run enterprises, but PML-N had already stated in its election manifesto in January 2013 that it would start privatisation in case the party came into power as it carried out during 1990 by selling major banks to the private sector.” There were no other options than to sell these bleeding institutions as their losses were increasing with the passage of time,” he maintained.

The Cabinet Committee on Privatization has decided to privatise 68 public sector entities (PSEs). Every year, around Rs 500 billion is wasted due to mismanagement and operational flaws in these 68 state-run enterprises. According to official estimates, among these PSEs, the eight major state-run entities are receiving more than Rs 300 billion in annual support and bailouts from the federal government.

Zubair said privatisation would not only save the taxpayers’ money from going waste, but this process would also improve the performance of loss-making institutions and they would be able to pay tax, ultimately benefiting the economy.

On a question regarding a strong resistance from opposition parties, the Board of Investment chairman said the government would leave no stone unturned to make the privatisation process 100 percent transparent. “The first priority of the government in the process will be to ensure protection of the workers of public-sector entities. The government will offer voluntary separation scheme to the employees in order to make sure that employees will be safeguarded,” he asserted.

The companies which have so far been cleared for privatisation include Oil and Gas Development Company Limited, Pakistan Petroleum Limited, Mari Gas, Pak-Arab Refinery, Pakistan State Oil, Sui Southern Gas Company Limited, Sui Northern Gas Pipelines Limited, Pakistan International Airlines, PIA-Roosevelt Hotel in New York, Pakistan Railways, Gujranwala Electric Power Company, Lahore Electric Supply Company, Islamabad Electric Supply Company, Faisalabad Electric Supply Company, Northern Electric Generation Company, Pakistan Steel Mills, National Power Construction Company and Pakistan National Shipping Corporation.

In the financial sector, National Bank of Pakistan, First Women Bank, SME Bank, National Investment Trust Limited, National Insurance Company Limited, Pakistan Reinsurance Company Limited, State Life Insurance Corporation and House Building Finance Corporation have been selected for privatisation. The Civil Aviation Authority, Karachi Port Trust, Port Qasim Authority and the National Highway Authority are also on the list.