ISLAMABAD: Privatisation Division has finalized a five-year (2024-29) privatisation programme on the direction of Prime Minister Shehbaz Sharif to be presented to the Cabinet Committee on Privation (CCoP) on Friday (May 10), sources close to Privatisation Minister told Business Recorder.

Sharing the details, sources said, in a presentation to the Prime Minister, held on March 7, 2024, the Prime Minister directed that a comprehensive privatisation programme for the next five years (2024-29) may be chalked out for privatisation of entities reflected in the Federal Footprint State Owned Enterprises Consolidated Report FY 2020-22 in consultation with the concerned ministries/Divisions based on the following policy guidelines: (i) loss-making Commercial SOEs shall be privatised on priority; (ii) foot print of the Federal Government shall be restricted to Commercial SOEs having some national or strategic interest; (iii) profitable commercial SOEs shall also be identified to reduce Federal foot print in economy; (iv) the programme shall have three phases (0-1 year, 1-3 years and 3-5 years); (v) issues, including but not limited to, employees, property, legislation, regulations, liabilities, etc, required to be addressed or likely to hinder the privatisation process may be identified along with the proposed way forward; and issues pertaining to SOEs, already included in the Active Privatisation List, shall be resolved by the concerned ministries/Divisions, on priority, in order to fast track their privatisation.

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In view of the PM directive and in terms of Rule 8(1) of Rules of Business, 1973, all Ministries/Divisions were requested on March 8, 2024 to share their responses/recommendations on inclusion or otherwise of the Commercial State-Owned Enterprise (CSoE) in the privatisation programme based on policy guidelines. Ministries/Divisions did not provide an exhaustive list of their CSoEs, as per the report, as out of 19 Divisions with CSoEs under their domain, 15 Divisions responded providing input on only 60 CSoEs out of a total of 87 CSoEs listed in the report.

The responses of the Divisions had the following deficiencies/shortcomings: (i) ministries/Divisions did not provide an exhaustive list of their CSoEs as per the Report as 27 CSoEs were not reported out of a total of 87 CSoEs listed in the Report; (ii) 37 CSOEs, which were not recommended for inclusion in the Privatisation Programme, were excluded without providing the basis of exclusion; (iii) responses from the ministries did not indicate the phases (0-1 year, 1-3 years, 3-5 years) in which the entities are proposed to be privatised; and(iv) Ministries did not indicate the issues associated with CSoEs.

An inter-ministerial meeting was held on April 23, 2024 for a meaningful consultation enabling the Privatisation Division/ Privatisation Commission to finalize an effective and implementable privatisation programme. The ministries/Divisions were requested to provide information related to all CSOEs, under their respective domain, on the prescribed proforma by April 25, 2024.

Responses of the Ministries/Divisions are as follows: (i) 84 CSoEs have been reported by the concerned Ministries out of a total of 87 reflected in the report. Three CSoEs have not been reported/identified (PECL, PSM, SEC); (ii) ministries/Divisions have also indicated 14 entities (beyond these 87 CSOEs) out of which 02 (HAZECO, PLICL) are suggested for inclusion in the Privatisation Programme; (iii) in total 65 CSOEs of the report are not recommended for privatisation. 39 CSOEs have been proposed to be excluded owing to their Strategic/Essential nature whereas 18 are not recommended for other reasons and 08 termed as non-SOE; and (iv) 21 entities (19 CSoEs of the report and 2 additional entities) are recommended for privatisation by the Divisions.

The PC Board, in its 218th meeting held on May 2, 2024, considered the proposals of ministries/Divisions and observed as follows: (i) 39 CSoEs, categorized as Strategic/Essential by the Divisions, require approval of the competent forum (CCoSOEs) as per para 11 of the SOE Policy 2023. Therefore, CCoP may like to direct the Divisions to immediately undertake the process for its approval from the respective Boards and CCoSoEs. After such approvals by the CCoSoEs Strategic/essential CSoEs shall not be considered for inclusion in the privatisation program, and those not categorized as strategic/essential SOE shall be included in the privatisation program; (ii) Finance Division, being custodian of the SOE Act, 2023, SOE Policy, 2023 and the Federal Footprint SOEs Report, has categorised 08 SOE namely Pak-China Investment Company, Pak-Iran Investment Company, Pak-Libya Investment Company, Pak-Oman Investment Company, Pak-Kuwait Investment Company, Pak-Brunei Investment Company, Saudi-Pak Industrial & Agricultural Investment Company and National Investment Trust Limited (NITL) as non-SOEs. Finance Division to immediately present the proposal before the CCSEs for inclusion or otherwise of these entities in the privatisation programme, based on their categorisation as SOE or non-SOE, in terms of SOE Act and Policy; (iii) Commerce Division has recommended Pakistan Reinsurance Company Limited (PRCL) and State Life Insurance Company (SLIC) as Strategic/Essential SOE. PC Board was of the opinion that these two entities are already included in Active Privatisation List (APL), thus recommended their inclusion in the Programme. However, since categorization of SOE as Strategic/Essential was the domain of CCOSOEs it was proposed that CCoP may like to direct Commerce Division to immediately present the proposal before the CCoSoEs for categorizing them as strategic/essential in terms of para 9 of the SOE Policy, 2023. If not categorized as strategic/essential the same shall be included in the privatisation programme; (iii) CCoP may like to direct Power Division to carve out efficient power plants (Combined Cycle) from GENCOs and privatise these as opposed to privatising GENCOs as a whole as suggested by Power Division.

The obsolete technology-based plants may be disposed-off by the Power Division; (iv) CCoP may like to consider 18 SOE, not recommended by ministries/Division, for other reasons including Sovereign Wealth Fund, Agreements with other countries, Merger/winding up, etc. for their inclusion or otherwise in the Privatisation Programme;(v) 09 Discos may be included in the Privatisation programme (08 already on APL and 01 new namely HAZECO) whereas 02 DISCOS namely TESCO & QESCO may be retained as per the recommendations of the Committee constituted by the Prime Minister. The PC Board recommended to adopt the recommendations of the Committee constituted for the purpose;(vi) CCoP my like to direct Administrative Ministries/ Divisions to fast track resolution of issues associated with SOEs included in privatisation programme, with specific timelines, to avoid hindrances in its smooth implementation by Privatisation Commission; and (vii) CCoP may like to direct the Administrative Divisions and the Heads of SOEs of the entities approved for inclusion in privatisation programme 2024-29 to ensure completion of all formalities as provided in Model questionnaire with specific timelines, and provide information to Privatisation Commission on prescribed format by 10th June 2024.

The PC Board has recommended the CCoP to approve inclusion of the following CSOEs in privatisation programme (2024-29) along with phasing: (i) 06 CSOEs currently on the active privatisation list may be retained (PIACL, RHC, FWBL, HBFC, PECO, SEL); (ii) 04 CSOEs currently on the active privatisation list may be delisted (NPPMCL, Republic Motors, JCC (observations raised by CDA), Properties); (iii) 06 new/fresh CSOEs proposed by administrative Divisions (USC, ZTBL, HAZECO, PLICL, GENCOs may be included with observations of PC Board; (iv) 02 CSOES (PRCL, SLIC) to be retained in the Privatisation Programme, as already in APL, unless categorized as Strategic/Essential by CCoSoEs; (v) 09 Discos may be included in the Privatisation programme (08 already on APL and 01 new namely HAZECO) whereas 02 Discos namely TESCO and QESCO may be retained as per recommendations of the Committee constituted by the Prime Minister, PC Board recommended to adopt the recommendations of the Committee constituted for the purpose; (vi) only efficient power plants (Combined Cycle) of the four GENCOs may be included in privatisation programme. 02 ONPP/GPP) may be included if CCP earlier decision is complied with; (vii) SOE, not categorized as Essential/Strategic by CCOSOEs subsequently, shall be included in the Privatisation Programme; and (viii) include any other CSOE(s), as deemed appropriate by CCoP.

Privatisation Commission has recommended the CCoP to direct Administrative Ministries/ Divisions to fast track resolution of issues associated with SOEs included in privatisation programme, with specific timelines, to avoid hindrances in its smooth implementation by Privatisation Commission.

The CCoP has also been requested to direct the Administrative Divisions and the Heads of SOEs of the entities approved for inclusion in privatisation programme 2024-29 to ensure completion of all formalities as provided in Model questionnaire, with specific timelines, and provide information to Privatisation Commission on prescribed format by June 10, 2024.

Copyright Business Recorder, 2024

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Tariq Qurashi May 09, 2024 10:01am
I wish the government the best of luck! There has been a lot of talk about privatization over the years, but no action ; vested interests have always put a spanner in the works.
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KU May 09, 2024 12:38pm
At an avg loss of Rs. 1 trillion annually by SOEs, debt ridden country is supposed to bear Rs. 5 trillion for the next 5 years? Surely, the criminals have surpassed their own records of corruption.
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