Rather confusingly, according to the Cabinet Committee on Privatisation, the federal government is reportedly looking to sell its shares in major oil and gas exploration companies to encourage an inflow of capital. Coupling with the Ministry of Privatisation, the process of divestment of 18 Public Sector Enterprises (PSEs) is underway but what sparks confusion is the fact that all these entities are not operating in losses. Thus, as potent sources of revenue, what need would there be for stakes to be sold?

The Oil and Gas Development Company (OGDC), Pakistan Petroleum Limited (PPL) and Pakistan Reinsurance Company Limited (PRICL) are all blue-chip companies. This entails that they are well-established, renowned and heavily capitalised. As such, they are the leading companies of their sectors that are incredibly profitable. For the government to let go of the 7, 10 and 20 percent holdings respectively, seems like an ill-informed decision since they are a consistent source of income. Divesting will surely allow for immediate free-flowing capital but, in the longer run, would rob the state of the opportunity to profit off of their high dividends.

Furthermore, even the feasibility of this quick fix is also under question by the Privatisation Commission (PC). Given the way the market is functioning, the divestment price for each company is far below than expected due to the absent demand for oil in the market, owing to low prices. Thus, even this solution is ill-advised until the market condition improves. Thus, reasons for why such drastic measures against these companies in particular are being taken is something that needs to be highlighted by the authorities.

On a side note, if revenue generation is the goal, alternate solutions like selling shares of non-profit making companies, which are operating at a loss, seems like the smarter way to go about it. To justify eliminating all stakes from companies that deal with widely used, and extremely profitable, commodities, the government needs to give answers.