Process will now be completed by March 2002 instead
of December 2001
From SHAMIM AHMED RIZVI
Jan-07- 13, 2002
Although it is not substantiated by the ground
realities, the minister for Privatization Mr. Saleem Altaf claimed that
despite delay in the first phase of privatization due to geopolitical
situation in the region he will achieve the target of 3 billion dollars
from the Privatization process by Dec. 2002.
Previously the target was of $ 4 billion, $ one
billion by Dec. 2001, another $ 2 billion by June 2002 and the rest by
Dec. 2002. In a press interview Mr. Saleem Altaf said that he expected
proceeds of $800 million to one billion dollars from the strategic
privatization of government assets during by the end of 2001 will face
the delay of three months and the prevailing process will now be
completed by March 2002 instead of December 2001. He said the bidding
date for the first phase of major assets was October 18, 2001 but that
was delayed for three months on the request of potential bidders.
"Now we are receiving signals from these bidders that they are
ready to come in the first quarter of next year". Independent
economists, however, do not agree with the Privatization Minister.
According to them the bidding dates will have to be further extended in
view of the growing tension between India and Pakistan. Foreign investor
will avoid making any investment in Pakistan in this tense atmosphere
and war like conditions between the two nuclear powers.
The Privatization programme of the government of
Pakistan received a serious jolt in the aftermath of Sep. 11 scenario
and US attack on Afghanistan. As a result Pakistan's recession hit
economy received another set back as it raced a shortfall of about 1000
million dollars due to withdrawal of interested foreign investors to bid
for giant public sector enterprises such as PTCL, UBL and nine oil and
gasfields which were scheduled to be privatized by Dec. 2001. This
programme involving foreign investors was put on hold because all the
major interested investors in the sale process of major entities had
cancelled their visits to Islamabad in view of war breaking out in the
The economic managers of Pakistan have been trying to
kickstart the derailed economy but, known as they are for setting
unrealistic targets, their efforts relating to privatization process
were among the ambitious targets. The government has yet to make any
significant achievement in this connection and most of the last two
years were spent in providing legal cover to this whole process. The
government succeeded to promulgate an ordinance in this regard. "We
intend to increase the pace of the process in the current fiscal year
and a schedule has been finalized of major transaction but the
prevailing situation has created impediments in the way of achieving the
desired results, an official said adding that "No one will be ready
to come in Pakistan until the hovering clouds of war are removed".
The Cabinet committee on privatization (CCOP) which met in Islamabad
last month, took stock of the present situation. The meeting which was
presided over by the Finance Minister Shaukat Aziz however, asked the PC
to go ahead with the transactions where foreign investors were not
In a very candid and open interview, the Minister
said the privatization of major assets have been delayed but minor units
privatization continued from which government till now has earned Rs.2
billion. "The bids of the strategic assets have been delayed on the
request of international bidders due to the prevailing situation in the
region though we were ready to go ahead with the process in accordance
to our time schedule," he added.
He was of the view that the recent visit of president
Pervez Musharraf to China will have a very positive impact on the
privatization process as a large number of Chinese oil and gas companies
have shown great interest in the oil and gas field of Pakistan. "We
are hoping that they will definitely participate in the privatization of
PSO and OGDCL", he added.
Mian Saleem Altaf said that the due diligence of
"United Bank has started and it will be offered for sale in the
second quarter while Habib Bank will be offered for sale in third
quarter of 2002 as final decision in this regard will be taken by June.
"I am in favour that all banks should be privatized and government
should not be involved in business and when the appropriate time will
come the complete privatization of National Bank will also be
considered," he added.
It was due to this consideration that 10 per cent
shares of National Bank have been off-loaded through stock exchange and
now 28,000 small investors have become its co-owners. "Now
government is considering to dislodge its 30 per cent shares in Bank Al-Falah
by March 2002", he added.
He said Oil and Gas Development Corporation Limited (OGDCL)
will now be offered for sale in September 2002. Dispelling the criticism
that institution being a profitable entity should not be privatized, the
minister reminded that the OGDC during the past 50 years have drilled
only 16 wells while in Canada 16,000 wells are drilled every year. We
want such an investor should take the corporation who can increase the
number of drillings which will be beneficial for the country in the
longer run", he added.
He disclosed that all the 14 bidders who before the
delay were to participate have confirmed to us that they will be
participating in its sale when offered next year.
He did not agree with the impression that
Privatization Minister has shifted from its policy of strategic sale to
sale through stock exchanges. "It was our confirmed decision to
have a two pronged strategy right from the beginning and wherever we are
finding it feasible and atmosphere congenial we are opting for sale
through stock exchange," he added.
While fully agreeing that privatization programme
should continue, the independent economists are, however, of the view
that entire process should be put on hold for the time being in view of
the recent development in the region. At the present juncture the
investors confidence in the stock market stands shattered and equity
values are moving on a slippery path for reasons which have originated
largely from external events following the US attack on Afghanistan and
hovering war clouds in the sub-continent.