The Initial Public Offering (IPO) of Oil and Gas
Development Company (OGDC) is scheduled during November 10-14, 2003.
The government plans to sell its 2.5 percent stake
in this one of the most financially strong state-owned entities. It is
going to be the biggest IPO during last 9 years. Prior to that period,
the government had offered 12 percent stake in the state-owned company
i.e. Pakistan telecommunications. According to official announcement
made by Karachi Stock Exchange (KSE), the OGDC was provisionally
listed on October 29, 2003, while public subscriptions will start from
November 10 to November 14.
A total of 107.5 million OGDC shares will be sold
at a price of Rs32 each through the stock offering, with a green shoe
option that may add another 2.5 percent stake taking the total size of
the offering to 215 million shares.
This huge oil empire in fact besides having a
strong financial back up has many other attractions in the store to
offer to the investors including a series of successful oil and gas
explorations in different parts of the country.
OGDC had paid a capital of Rs43 billion. It carries
the largest share of oil and gas reserves in the country which are
estimated to the tune of 48 percent of total oil and 37 percent of
total natural gas reserves.
In view of the strong financial background, the
offer is likely to have an overwhelming response of the investors. The
experts are of the opinion that it may repeat the past experience of
the National Bank shares and more shares may be off-loaded through
stock exchange by the government in future. The second phase of the
company's privatization also includes the sale of minority stakes in
the state-run OGDC internationally through global depository receipts.
It is interesting to watch that the shares of OGDC
are being offered to the public at a time when the stock market is
passing through disturbed waters as the trading at the share markets
has been quite uncertain for sometimes. Under the prevailing
situation, it is yet to be seen that how this new arrival makes its
impact on overall trading scenario of the stock market. Prior to the
chain of quick changes taking place at the stock market, some leading
brokerage houses were of the opinion that the KSE index may hit the
all time high 5000 points at the end of the current financial year.
However, this estimate was seen a little bit shaky in the backdrop of
a sudden change in the instance of neighboring India. The situation
however took a change when some positive developments such as yet
another offer of reconciliation extended by unpredictable leadership
of India, growing bilateral relations with China and Iran.
According to official version, the OGDC's public
offering which is sure to lead to green shoe option which means the
sale of 5 per cent stake of the government would augment the volume of
the capital market by Rs 7 billion. Its complete enlistment of shares
on all stock markets would enhance capitalization from $17 billion to
$20 billion making it a market worth consideration by foreign
Total OGDC shares could have a gross volume of
Rs137 billion, however, the situation regarding its strategic sale
would be clear by the year-end. The privatization of public sector
entities is the best way out for enhancing ownership base and the same
time add to market's depth of capitalization. The privatization was
bound to payback handsomely to the national economy in terms of better
output of key institutions.
Being a profit making entity, OGDCL would get
response for its IPO and set a healthy trend for future privatization
of the government's stakes in the public sector organizations. The
government on its part claims to strictly follow a policy of free
market wherein the government's role would be that of a facilitator
and the regulation would rest with an independent regulator.
Recently, the Manging Director of OGDCL, Najam
Kemal Hyder, while projecting the performance and technical expertise
of the company in the oil and gas sector said it operates in the three
provinces of the country. These provinces are including NWFP, Sindh
and Punjab. OGDC also operates in the Northern Areas of the country
and never gave up any of its projects on security considerations.
Currently, OGDC is actively engaged in completing
its ambitious exploration plan for the financial year 2003-04. In
fact, OGDC has a number of exploratory projects in hands which it
plans to start next financial year. Meanwhile, the government has
directed that public offering of more state owned entities like SSGCL,
PIA and Kapco shares should be processed expeditiously. The
instructions have already been issued by the Ministry of
Privatization. The mode adopted for the divestment of shares of
various public sector entities through stock market ensures the
transfer of the benefits of privatization to the people of this
country besides helping in developing a deep and broaden capital base
of the country.
One of the major reasons behind uncalled for delay
in privatization of the public sector organizations must the elements
having vested interests. Since, the privatization of the public sector
organizations hits the interests of the people enjoying a princely
life at the cost of the people. Such elements will now be answerable
to the share holders in future.