20000123

New rules for privatisation thru bourses in Feb: Saleem

HARIS ZAMIR

KARACHI: The Privatisation Commission will unveil new laws next month for speedy and transparent privatisation process, inducting directors from the private sector in the boards of various state-run companies before disinvestment and all future disinvestment through the stock exchanges, using proceeds to retire foreign debts.

Privatisation Commission Chairman Altaf M Saleem' at a meeting with the members of the Karachi Stock Exchange (KSE) on Saturday said that the priority of the commission was to unload strategic shares of oil, gas and financial sectors.

He said that oil and gas wells would be privatised but added that pre-requisite would be addressed first. Explaining further, he said the government had offloaded the shares of Sui Northern Gas but did not constitute gas regulatory authority and fixed a gas pricing formula. This discouraged the foreign investors who were reluctant to buy more shares of the company.

Saleem emphasised that the process would begin only when the commission was sure a unit could be sold within a certain time-frame. First the commission would assess how long it would take for strategic investors to come here and then it would ensure that false hopes about privatisation were not engendered in the minds of the investors and professionals in the financial markets.

The PC chairman said that after due deliberations' it had been identified that several units could be privatised in zero to eight months' time. While a few had been selected and could be disinvested in 8 to 18 months, some of the units would be privatised after 18 months time-frame.

"The commission wants people from the private sector and especially from the stock market to design laws pertaining to privatisation. The main objective of the Privatisation Commission is to enhance the value of public sector assets and hand over these state-run companies to those groups which could run them efficiently and generate more profits", Saleem said.

The government would not sell its stake on throw-away prices, he added.

There are several state-run companies which if not privatised would be on the sick list and needs a redressal through competent and professional hands to make them profitable. For this, he elaborated, the privatisation commission has chalked out a plan and before disinvestment, four to five professionals would be inducted in each company to make it viable for the privatisation.

Saleem said that the induction of directors would be given a cover in the the new laws and would aim to protect the interest of the small investors in the privatisation process. Separate share pricing formulas would be designed for the strategic and general investors.

"We are not going to scrap any expression of interest and in eight months period would disinvest the shares of Saudi Pak Fertilizer Company", he said.

He said that the government ensure maximum participation of general public in the disinvestment of state-owned companies. The commission has completed its homework and has studied privatisation policies of other countries before finalising the new laws to be announced next month.

Earlier, Arif Habib, the Chairman of the KSE, said that the exchange could become an important vehicle for privatisation. The offloading of five to 10 percent shares through stock market could not only improve the market capitalisation but would also give new opportunities for investment.

The unloading of shares through the stock market, he said, would also attract foreign investment in the local bourses as they would get more companies to invest in.

Foreign investment at present is deterred because of the small size of the market. The market capitalisation of the KSE at present is $9 billion with 764 listed companies, whereas at Mumbai stock exchange about 23,000 companies are listed, its market capitalisation is $119 billion and value traded per day is four times higher than KSE's Rs 11.147 billion.

"We can improve the market capitalisation if at least 10 percent shares of the state-units are privatised and offered for listing at the stock market", he suggested. The commission should check the track record of the management bidding for units so that transfer of state units should become an important vehicle in improving the economy of the country.

Above all the credibility of policies must be ensured, Habib said, if the government wants serious participation of general investors in the privatisation process. Erratic policies, delay in implementation and sudden changes in the rules and regulations would dampen the investor sentiment or strategic investor in any privatised unit.