PPL Privatisation on Schedule
Mr. Khaleeq Kiani’s statement in the Daily Dawn (31 May 2002) suggesting that the government has decided to put on hold the privatisation of PPL for one to two years is not based on facts. In fact, the Privatisation Commission (PC) is finalising a contract with the Financial Advisor (FA), Merrill Lynch, for the sale of 51% shares in PPL within a 12 month schedule.
The Government intends to ensure that fair proceeds from the privatisation are obtained no matter when the privatisation occurs. The Government decision to increase PPL wellhead prices gradually over five (not three) years means that the transaction has to be carefully structured to ensure that sale proceeds are not adversely affected. While this will require more work, it is not unusual. Investment banks such as Merrill Lynch have often structured such transactions in other countries.
In order to ensure full government commitment to the privatisation before disbursing funds to the FA, the PC is finalising a financial advisory contract that would only become effective after the transaction structure is approved. Under the proposed arrangement, the FA will carry out preliminary work on the range of options for a transaction structure that is suitable for PPL and is in the national interest.
There are several benefits to the privatisation of PPL. In addition to receiving sale proceeds that would be utilised for debt retirement and poverty alleviation, the privatisation of PPL is aimed at ensuring that adequate investment funds are available to increase gas production and that efficiency and profits improve. Moreover, the GOP would benefit from increased taxes. Finally, as the GOP would still hold about 42% of shares in the privatised company, it would benefit from increased dividends.
The media is encouraged to check with the spokesperson for the Privatisation Commission before publishing statements on privatisation to ensure that the statements are based on facts.
