Shipping firm, two ports removed from privatisation list

ISLAMABAD: The federal government on Thursday removed three more state-owned companies from the privatisation list and put the plan of selling a power company on the back burner which it had included in the active privatisation list 10 months ago.

The Cabinet Committee on Privatisation (CCOP) erased Pakistan National Shipping Corporation, Port Qasim Authority and Karachi Port Trust from the privatisation programme due to the strategic importance and profitability of these entities, according to a statement issued by the Ministry of Finance.

These enterprises were delisted on the request of the Ministry of Maritime Affairs, it added. The decision was taken in the wake of federal cabinet’s earlier move to declare shipping as a strategic industry. The maritime affairs ministry was of the view that these profitable enterprises should not be privatised.

However, like any public sector entity, these entities were also not very well managed, said sources in the Ministry of Privatisation. A key reason for their profitability was that they enjoyed preferential treatment compared to the private sector, they added. Their profitability as compared to regional peers was very low, they added.

The CCOP gave directive for excluding the Lakhra coal mines and power plant from the active privatisation list but it kept the company in the sell-off programme.

The CCOP had in October last year approved the privatisation of Lakhra Coal Development Company as part of the active sell-off programme. The company is the sole supplier of coal to the Lakhra power plant. The Privatisation Commission had expressed its inability to go ahead with the Lakhra mines privatisation due to a dispute with the Sindh government over renewal of lease agreement of the mines.

The Sindh government has turned down the request for renewal of the lease which expired in 2015 and the matter was pending before the Supreme Court. Furthermore, as per the Principal Shareholders Agreement executed by and between PMDC, Sindh government and Wapda, in case of exit by any of the parties, the remaining parties have the first right of refusal.

The CCOP also directed the Ministry of Privatisation to expedite the process of privatisation of approved public sector enterprises and advised the ministry to hire financial advisers for at least 10 state-run enterprises before the next CCOP meeting.

The CCOP empowered the Ministry of Privatisation to select any 10 units and start forthwith the process of hiring financial advisers, collectively or separately as per requirement, for the selected units. Different ministries were reluctant to cooperate with the privatisation ministry and were delaying matters. The commerce ministry had sought three months for conducting a study of the insurance sector before handing over two insurance companies for privatisation. Over nine months have passed and the commerce ministry has not yet been able to complete the study. It has sought another six months to do the work that can be done in just weeks.

The CCOP asked the privatisation ministry to take the initiative after the line ministry’s reluctance to cooperate. The government has not been able to finalise privatisation plan for Pakistan Steel Mills (PSM). There has so far been lukewarm response to the Expressions of Interest invited for hiring financial advisers for PSM’s revival or privatisation. The deadline is going to end next week.

The privatisation ministry also did not get a good response to the advertisement given for hiring consultants to sell the Jinnah Convention Centre.

CCOP Chairman Dr Abdul Hafeez Shaikh said the government was committed to pursuing the privatisation programme, assuring the Ministry of Privatisation full institutional backing and requisite resources to fast-track the process.

The cabinet, in its meeting held on June 3, 2019, had already approved the initiation of process for hiring financial advisers for the selected 32 properties.

The Ministry of Privatisation informed the committee that the privatisation process started in January 1991 and a total of 172 transactions had been completed with total proceeds of Rs649.3 billion for the national exchequer.