Despite various measures taken by the present government
including conferring a ministerial status to the Privatization Commission (PC)
with full powers to manage the privatization process without interference from
other ministries and a special law empowering the new ministry to adopt
different options for privatization, the fact remains that the Privatization
Plan of the present government falls far behind the schedule.
Privatization Ministry's 4 billion two-year privatization
plan is nowhere in sight. Out of 23 units which were planned to be privatized
during its short term plan ending December 2000, only two have been disposed of
bringing the achievement to less than 10 per cent of the target. The short-term
plan, unveiled last July by the authorities, had envisaged selling of 23
entities by December 2000. In over five months the ministry has sold 9 per cent
government shares in Muslim Commercial Bank (MCB) and Liquefied Petroleum Gas
(LPG) business of Sui Southern Gas Company (SSGC).
The list of 23 included key entities like nationalized banks
working interests in 9 oil and gas fields, noncore assets of Sui Southern Gas
Company (SSGC), Sui Northern Gas Pipeline Limited (SNGPL) Pakistan State Oil (PSO),
minority shares in POL and ARL, PSO shares in PRL and Pak-Saudi Fertilizer.
Besides these major entities the authorities had listed 16
industrial units to be handed over to private sector by the year-end. The
privatization ministry, formerly privatization commission, had identified 49
units for privatization in the two-year short-term and medium-term plan.
The former Chairman and now a minister has been making
emphatic claims to meet its short term and medium term targets. After failing to
achieve the same he came out with various explanations. The latest being that
the commission without being an independent Ministry felt handicapped in
carrying out its operations That has also been granted now. The new minister is
no other than the chairman of the Privatization Commission himself — Mr. Altaf
Saleem. And the law turns the commission into a corporate body, with full powers
to manage the privatization process without interference from any ministry. The
law provides the ministry a number of options for privatization namely sale of
assets, sale of shares through public auction or tender, public offering through
stock exchange, employee buyout and lease or management contract.
The other provisions of the law concern mostly issues that
arise after the sale like litigation by affected and interested parties like
employees, failed bidders and past owners and also the issue concerning how to
use the privatization proceeds.
The mere fact that the privatization commission has been
elevated to the rank of a cabinet ministry or a law facilitating an acceleration
of the privatization process has been legislated, makes only a marginal
difference. What is needed is the will of the government as a whole to take up
the process in the right earnest.
After over six months deliberations the privatization policy
was enforced through an ordinance in July 99. While unfolding the new policy,
the former chairman of the commission said that under the new 2 year policy
which had been approved by the National Security Council 49 units had been
identified for privatization during the next 2 year to fetch over 4 billion US
dollars. He declared privatization process will kick start on Aug.24 with the
sale of liquefied gas (LPG) business and will be completed by July 2002. He also
gave the names of 49 state-owned entities included in the two-year privatization
plan. All 49 entities will not be completely sold. In certain cases we will sell
only 25 per cent shares, in others 50 to 100 per cent, he explained to a
questioner who believed earnings of four billion dollars were not a sufficient
amount for all the 49 units. He said about a dozen units were expected to earn
75 per cent of the total proceeds while the remaining would fetch 25 per cent.
He claimed that at least one entity would be put on sale
every alternate month for price maximization. The plan is to start from small
entities, to medium size and then to bigger ones to develop credibility
"During the process we will also judge the appetite of the market as
well," he said.
The financial and utilities organizations which were to be
unloaded wholly or in partly by Dec.2000 are: Allied Bank (disinvestment of 49
per cent share NBP, HBL, MCB and Sui Southern Gas Company (public offer); nine
oil/gas fields (working interest); LPG and meter manufacturing units of the SSGC,
SNGPL, and PSO, POL, ARL (minority share holding) PSO shares in PRL; and
Industrial units are Pak Steel Fabricating, Suzuki Motorcycle
Pak. Ltd. Sindh Engineering, Khonioor Oil Mills, Marafco Industries, A.C. Rohri
Cement, Javedan Cement, Lyallpur Chemicals, Hazara Phosphate, Ravi Rayon,
Larkana Sugar Mills, Shahdakot Textile Mills, Talpur Textile Mills, Dir Forest
Complex, PECO (Badami Bagh), and TDC Vehicle Engineering.
Besides, transactions envisaged to be undertaken during the
medium term privatization plan (ending on June 30, 2002) include
telecommunication, financial/banking, Oil/gas power/electricity, insurance
The former PC, Chairman claimed "our privatization plan
is realistic and our calculations reasonable. There is every possibility that we
would succeed in raising 4.50 billion dollars (against target of 4 billion
dollars) by selling the public sector units". Saleem was pointed out that
in view of the declining foreign investment over the last few years and
reluctance of the local businessmen to invest in privatization plan which
envisages to raise 4 billion dollars from the sale of 49 public sector units in
a two-year phased programme appeared ambitious and unrealistic.
He said the commission had taken 6/7 months to formulate the
new plan announced. "During this period, we have tried to frame and put in
place a regulatory environment, restore investors' confidence and reform the
economy to attract foreign investors. No one can guarantee the future but we are
hopeful that our plan will succeed in achieving the target.
The real achievement of the Privatization Ministry, so far,
has however, no relevance to its tall claims. As stated earlier out of 23 units
earmarked for privatization till Dec.2000 only two could be sold. The process
did start in Aug. as earlier announced but it could not pick up. Let us hope for
some improvement now when the commission has been converted into a full fledged
independent Ministry with all the powers demanded by the former Chairman of