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Pakistan plans to sell stakes in at least three companies by the end of
June, reviving an asset sale program stymied by political instability and a
slowing economy. “This will be the start of our program with a new concept of
modernizing companies with efficient management rather than a fund-raising
target,” Privatisation Minister Naveed Qamar said in an interview to a US
based cable news network (Bloomberg) at Islamabad.
Ministry officials will meet potential buyers for National Power Construction
Co. (NPCC) on March 28 to set a bidding date as early as next month, he said.
Stakes in Jamshoro Power Co. (JPC) and Heavy Electrical Complex (HEC) may be
sold by June 30, Qamar said.
Funds raised from asset sales fell by a quarter last year as political
wrangling and terrorist attacks in the nation’s biggest cities deterred
overseas investors. Pakistan yesterday said it would seek $10 billion in funds
over the next three years for development projects after securing a $7.6
billion bailout from the International Monetary Fund to avert default.
Since the start of this fiscal year on July 1, Qamar has completed only one
transaction, raising 1.34 billion rupees ($16 million) by selling a stake in
Hazara Phosphate Fertilizers Ltd., a urea maker. That compares with the
previous government of former President Pervez Musharraf raising 25.5 billion
rupees in a year through stakes in Habib Bank Ltd. and United Bank Ltd.
Last month, Qamar, 53, announced changes to the asset sale policy, setting
aside 12 percent of shares to workers in state- controlled companies such as
Pakistan Railways and the Pakistan Post Office, the nation’s postal service.
“The benchmark is 26 percent” for the stake to be sold in almost every
company, apart from offering shares to employees, he said. The new concept is
to sell a minority stake and transfer the management, he said.
Workers in state companies previously received 10 percent. Sale of shares in
Pakistan State Oil Ltd., the biggest retailer, Pakistan Petroleum Ltd., the
No. 1 gas producer, and Sui Northern Gas Pipelines Ltd. and Sui Southern Gas
Co., the two gas distributors, has been taken off the “priority list” in the
new policy, Qamar, a California State University graduate in business
administration, said.
“We don’t want to flood the market in a hurry,” he said. “We will tap the
domestic and overseas stock markets when the time and conditions are right.”
State assets sold in a hurry in the past “are causing problems for our
government,” he said. Emirates Telecommunications Corp., the United Arab
Emirates’ largest telephone company, has delayed payments for a 26 percent
stake in Pakistan Telecommunication Co., the nation’s biggest, because the
government is unable to meet a bid-condition of transferring real estate, he
said.
Emirates Telecommunications bought the stake in 2006 for $2.6 billion, of
which payment of $700 million is pending. Pakistan, which has so far raised
476.4 billion rupees through an asset sale program that started in the early
1990s, was forced to turn to the IMF as it faced economic turmoil after growth
slowed, the rupee plunged 22 percent in 2008 and the balance of payments
deficit widened to a record.
South Asia’s second-biggest economy is predicted to expand 2.5 percent this
fiscal year, compared with annual average growth of 6.8 percent in the past
five years. It is seeking to increase foreign-exchange reserves that declined
75 percent in a year to $3.45 billion in October, raising doubts about the
country’s ability to repay debt.
“Our economic and security situation is not as bad as the perception
overseas,” Qamar said. “We offer opportunities through efforts of reviving the
economy and consistent growth. The overall outlook is positive and the early
birds will get the benefit.”
Pakistan completed its last IMF program in 2004 with a credit rating from
Standard & Poor’s of B+, four levels below investment grade. S&P in December
raised Pakistan’s rating one level to CCC+, or seven levels below investment
grade, after the IMF loan.
The Pakistan Peoples Party-led government came into power in March 2007 after
defeating the party loyal to former president Musharraf in Feb. 18 national
elections. Musharraf quit in August to avoid facing impeachment, ending his
nine-year military rule.