After the historic response to the Initial Public
Offering of the Pakistan Petroleum Limited (PPL) shares through stock
market, the divestment of government shares in Kot Addu Power Project
through stock exchange will be yet another attraction for the small
investors in the capital market.
Actually, the policy of the government to broaden the
private sector's stake in the public sector entities through divestment
of the shares has proved a great success and even the critics who always
love to remain on the left side have no reason to deny that fact that
the benefits of the policy of privatization of government assets through
stock market have started reaching down to the grass root level in the
The privatization of the government shares in the
energy sector, which is the most vibrant sector of the economy, is the
best example of the agenda of "privatization for the people."
Earlier the benefits of growth in the energy sector
were exclusively enjoyed by the governments in the past, however, it is
appreciable on the part of the economic managers who through their
liberal policies have made it possible to develop a sense of
participation in the national resources through privation of the
government sector entities through stock market through a mechanism to
ensure that the optimum benefits transferred to the small investors.
As a result of this policy the privatization of the
government shares in the public sector organizations like SSGC, OGDC and
recently offered PPL's shares which also set a land mark in the history
of the share bazaar as well with the huge volume of capital formation to
the tune of over Rs22 billion to the financial strength of the stock
market in Pakistan.
Besides capital formation at a massive scale, it is
interesting to note that the policy of privatization through capital
market has generated a lot of interest and enthusiasm among the people
for investment in the stock business at least in the urban areas of the
country. It was quite natural because of the handsome reward on the
investment in shares like PPL in which the overnight rate of return was
almost 100 percent. The IPO of PPL shares were offered at a premium
price of Rs55 per share and in the provisional trading in the PPL shares
at the stock market was quoted at Rs108-09 indicating a 100 percent
profit to the successful applicants of the PPL shares. A win win
situation both for the government as well as the small investors from
the private sector.
After successful launch of the PPL shares, now the
Ministry of Privatization has announced to launch the IPO of Kot Addu
sometimes in September. Kot Addu Power Project was the largest
Independent Power Producing Project of which the majority shares were
bought back by the government. Now under the policy of privatization the
government is expanding the base of public participation in this prime
power-generating project. It is expected that the response to the IPO of
Kot Addu shares would even better than the IPOs offered so far because
of the growing awareness among the people about the stock business.
Besides encouraging the public participation in the
energy sector, the government on the other hand was also offering
attractive incentives to the investors in the energy sector especially
the oil and gas sector, which is of course the engine of economic growth
in today's economy.
Recently, the government has allowed petroleum
exploration and production companies to temporary import aircraft,
drilling and seismic vessels, drilling bits and specialized vehicles
without payment of customs duty and sales tax. This is however subject
to the condition that the items should be re-exported as per laid down
procedure. Earlier, the facility of temporary import was only available
on the import of plant and machinery by the petroleum exploration
companies. This facility would be extended to all petroleum sector
companies, corporations and organizations including their contractors
and sub-contractors and service companies shall be entitled to import
machinery, equipments, helicopters, aircraft, drilling bits, drilling
and seismic vessels, drilling rigs, specialized vehicles and vessels for
construction, exploration and production of petroleum projects on import
cum-export basis without payment of duties and taxes.
Pakistan has a plenty of untapped resources
especially in the energy sector, however, it is unfortunate that the
some of the vested interested creating law and order situation
especially in the energy rich province of Balochistan. Those foreign oil
exploration companies which have been granted concession blocks in
Balochistan were finding it difficult to carry out their exploratory
work as well as free movement in the area due to security risks created
by the tribal leaders in that province.
The duty free import of aircraft and helicopter would
greatly help to the professionals for the risk free movement in the area
of the concession blocs. It is expected that the incentives may help
producing much better results in the days to come. The surveys carried
out indicate that Pakistan is an energy rich country and the huge
unproved oil and gas reserves if allowed would change the course of
economic history of this country.