Tuesday, February 9, 2010

Meetings held with banks in Dubai, London and US: Fresh financial advisers to re-assess value of national assets

By Ijaz Kakakhel

ISLAMABAD: To get maximum benefits from the sale of public sector entities, the government on Monday announced that it would re-assess the value of national assets on privatization list through fresh appointment of financial advisers.

In this regard, the government had held useful meetings in Dubai, London and the US with reputed investment banks for appointment of financial advisers, Minister for Privatization Senator Waqar Ahmed Khan told journalists on Monday.

At present, some 23 out of 80 public sector enterprises, were on the privatization list of the country and efforts were being made to include few more Public Sector Enterprises (PSEs) on the list.

The value of these PSEs on the privatization list was assessed at over $100 billion. After appointment of financial advisers, the valuation process would be completed in 90 days and results would be shared with the investors as well as other stakeholders.

Quoting the example of Pakistan Petroleum Limited (PPL) and Oil and gas Development Company Limited (OGDCL), the minister said according to the cash flows of both companies, the value stood at $2.5 billion, however, when market cap was kept in view, the value of these companies went up to $8 billion. “If, we take, 10 percent market cap while determining the value of such companies, these companies can fetch $25 billion,” he said.

The minister said this time the government had changed the procedure for the appointment of financial advisers. The government would bid for it as against the previous practice of direct appointment. The financial advisers would be paid for their consultancy charges after completion of the transaction, as against the past practice of payment in advance.

Strategic investors had strong interest in Pakistan’s privatization programme and there were huge surplus funds available with the investors to invest in Pakistan, the minister maintained.

He said Privatization Commission Board was being revamped and under the new transparency policy all four provinces would be given representation in the board and renowned jurists, journalists, bankers, academics and women would be included in the Board for transparent decision making.

To avoid any government influence on decision making at PC Board, he said he had surrendered his right of vote and decisions would be taken by the board independently.

He defended the present policy of privatization of 26 percent shares along with management control to the investors and said that at a time when global economic slowdown was having impact on all economies, it would be difficult to attract investors for 51 percent share.

He mentioned that policy of privatization of 26 percent shares along with management control would help realize more price of public assets as the private management would restructure and improve the efficiency of the public sector enterprises and it would increase the value of the government’s shareholding in such PSEs. The government, through value addition, would enhance efficiency and competitiveness of state-owned entities to maximize earning through privatization,

“We want to realize maximum potentials of the state-owned enterprises (SOE) by enhancing their cash value through value addition, besides enhancing their efficiency and competitiveness in the process of privatization for the benefit of the country,” he said.

Senator Waqar, while highlighting his recent meetings with international investors on the sidelines of Friends of Democratic Pakistan (FODP) in Dubai, said that major international financial institutions and investors had expressed their satisfaction on the prudent economic policies of the government and shown their keen interest to participate in the privatization programme of the government.

Pakistan, he said was a land of opportunities for investors adding Pakistan wanted to realize the maximum potentials of its resources and enhance production for the benefit of the people in the country.

Answering a question, he said the government and Etisalat wanted to resolve the outstanding dispute amicably and hoped that the issue would be resolved next month and $800 million to be released to Pakistan soon.

The minister said that besides strengthening and enhancing the SOEs, the president and prime minister wanted to empower employees of the institutions. He specially mentioned the launching of Benazir Employees Stock Option Scheme (BESOS) to achieve this objective.

Senator Waqar said the BESOS was the hallmark of the present government’s pro-workers policies, which would ensure improvement in efficiency, quality and production.

He said it would make workers responsible in further improving the overall performance of the entity and their representation on the Board of Directors would directly involve them in the decision making process for the progress of the entity. The scheme was historic and would usher a new era of workers’ revolution who were being given free of cost 12 per cent of the GoP shares in the SOEs and the entities already privatized. The scheme was not limited only to the non-privatized entities as it also includes all the privatized entities having GoP shares. The scheme was expected to benefit around 500,000 employees of 80 entities.


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