ISLAMABAD
Setting aside the reservations of the political parties and employees of public sector entities, the PML-N government is all set to privatise three power supply companies in upcoming fiscal year what it termed the bleeding PSEs.
The government would continue its privatisation programme in year 2015-16, as it planned to privatise Northern Power Generation Company Limited (NPGCL), Faisalabad Electric Supply Company (FESCO), Islamabad Electric Supply Company (IESCO) and Lahore Electric Supply Company (LESCO) and Convention Center Islamabad in next six to eight months. The government has estimated in the budget to generate Rs 50 billion from the ongoing privatisation of public sector entities in upcoming financial year.
"The amount generated from privatisation could increase, as government kept amount at lowest side", said an official of the Privatisation Commission.
It is relevant to mention here that government had generated Rs 170 billion from the privatisation proceeds during outgoing fiscal year 2014-15, which is Rs 28 billion lesser than the government's estimates of Rs 198 billion. The government had failed to achieve its target of generating Rs 198 billion due to the postponement of market transaction of $750-$850 million of Oil and Gas Development Company Ltd due to a significant drop in global oil prices.
The government had privatised five public sector entities so far in one year. In fiscal year 2013-14, United Bank Limited (UBL) was the first capital market transaction which generated over Rs 38 billion. The government divested approximately 5 percent shareholding in Pakistan Petroleum Limited (PPL), raising Rs 15.3 billion. Meanwhile, during ongoing financial year, the government had already completed the transactions of Allied Bank of Pakistan (ABL) in December last year that generated Rs14.4 billion, Heavy Electrical Complex (HEC) in March for Rs905 million and divested the shares of the Habib Bank Limited that will raise $1.06 billion (foreign exchange $764 million and Rs24,567 million).
The government is already working to privatise National Power Construction Corporation (NPCC) by the end of current fiscal year 2014-15 that might generate Rs2 billion for the national kitty.
Regarding privatisation of Pakistan International Airlines, Pakistan stated to IMF, "We have appointed financial advisors in July 2014 (structural benchmark) to seek potential options for restructuring and strategic private sector participation in the core airline business by end-December 2015 (structural benchmark).
Plans for private participation will be developed thereafter." The government also explained regarding privatisation of Pakistan Steel Mills by saying, "We have appointed a professional board and a new chief executive officer and approved a comprehensive restructuring plan to prepare for potential strategic private sector participation in the company. Operational efficiency has begun to improve and capacity utilisation has already climbed from 18 to 40 percent. In January 2015, we advertised for appointment of financial advisors, however, it was disqualified during the evaluation process. We have re-advertised on February 15, 2015 and expect to complete the appointment of financial advisors by end March 2015 so that the due diligence process can be initiated".