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Islamabad, May 31, 2002
The sale of Pak Saudi Fertilizers Limited (PSFL) to Fauji Fertilizer Company
Limited (FFCL) was completed today. Federal Minister for Privatisation, Mr.
Altaf M. Saleem, chaired a meeting to finalise the signing of the sale
agreement by which FFCL, as the highest bidder, paid Rs.135.85 per share for
90% shares (54 million) of PSFL (remaining 10% shares are to be finalized
within 60 days). Total sale proceeds will yield over Rs. 8 billion.
This landmark transaction is not only the first major privatisation completed
in the industrial sector but is also the largest Rupee transaction in the
history of the Privatisation Commission.
CCOP members unanimously expressed their satisfaction with the sale price and
commended the Privatisation Commission on following a fair and transparent
privatisation process. Earlier, each of the bidders had expressed confidence
in the transparent and professional manner in which the privatisation process
had been conducted.
Minister Saleem hopes that the transfer of management to FFCL will have a
positive impact on the agriculture sector through improved quality, better
marketing of products, and improvements to increase crop production.
MD FFCL, Lt. Gen. ® Amjad Shuaib thanked the PC for its efforts and for
extending a level field to potential investors. He assured the audience that
improvements would be made to PSFL commencing with an investment of Rs. 750
million to modernize the existing plant including complete computerization of
the unit to ensure product quality.
The size of such an investment reflects the restoration of investor confidence
in Pakistan and paves the way for future privatisations. The participation of
renowned companies in the privatisation process sends strong signals to both
foreign and domestic investors that investment climate in Pakistan is
favourable.
Upon completion of due diligence by the pre-qualified potential investors,
three parties had submitted sealed bids for PSFL. The ceremony for opening
those sealed bids was held in March this year. Participating parties included
Dawood Hercules Chemicals Limited, Engro Chemical Pakistan Limited and Fauji
Fertilizer Company Limited.
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Pak Saudi Fertilizer Limited (PSFL) is a public limited company, incorporated
in 1975, under the Companies Ordinance, 1984 to reduce the import of
fertilizers and to promote the fertilizer industry in Pakistan. The major
financing for this project was provided by Saudi government, and in
appreciation of this contribution, the Project was named Pak Saudi Fertilizer
Limited. Trial production started in April 1980 and commercial production in
October 1980.
The Head Office is situated 2.5 kilometer North east of Mirpur Mathelo, Sindh
at a distance of 104 kilometer from Sukkur. Total land area is about 566.2
acres. PSFL is one of the five urea-manufacturing plants presently operating
in the public sector. PSFL is a wholly owned subsidiary of National
Fertilizers Corporation (NFC).
Presently, there are nine fertilizer-producing units in Pakistan. Four units
are state owned and are controlled by the National Fertilizer Corporation (NFC).
The remaining five units are managed by the private sector. The state owned
units are Hazara Phosphate Fertilizer (Pvt.) Limited, Lyallpur Chemical &
Fertilizer Limited, Pak Arab Fertilizer Limited, and Pak American Fertilizer
Limited.
Units in the private sector are Engro Chemicals Pakistan Limited, Dawood
Hercules Chemicals Limited, Fauji Fertilizer Company Limited, FFC-Jordan
Fertilizer Company Limited, and now Pak Saudi Fertilizer Limited. Total
investment by the private sector in this industry is over Rs. 69.1 billion
(US$ 1,273 million).
Currently, total fertilizer production of Pakistan is about 5.1 million tons
per annum comprising 4.3 million tons of urea and other nitrogenous
fertilizers, and 671,000 tons of phosphorus based fertilizer. Of the total
yearly fertilizer produced, only 1.7 million tons (33.6%) is produced by the
public sector, while the rest (3.360 million tons or 66.4%) is produced in the
private sector.