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PC to sell off unrevivable units as real estate

NAYYAR ZUBERI

KARACHI: The Privatisation Commission (PC) has decided to sell unrevivable government-owned units as real estate.

Speaking at a meeting of the Karachi Chamber of Commerce and Industry (KCCI) on Tuesday, Altaf M Saleem, the Chairman of the Privatisation Commission, said there were many units which were lying closed for the last 15 years and had no chance of revival, no body being interested in purchasing them to run them. These units were just junk and would be sold out as real estate.

He said Javadan Cement property's value was a thousand times more than that of the unit itself. Although the unit was still in operation but it would be sold as real estate and not as a cement factory.

Besides, he said, this there were some units which were not privatisable one of these is Pakistan Steel. It was under consideration to sell land and property owned by Pakistan Steel to generate funds for re-structuring the mill.

The PC chairman said that the commission was striving for early privatisation of Pakistan Telecommunication Corporation (PTC) to fetch maximum sale proceeds

"If this unit was privatised six years ago the government would have got six times more than what it would get now. Delay in the privatisation would land this unit into disaster and it would become government's liability," he noted.

PTC was generating 42 percent of its revenue from international calls. The international calls tariff has already been reduced from 20 cents to 17 cents per call and added that under the World Trade Organisation (WTO) agreement, Pakistan has to further reduce its international call tariff.

Saleem said that he had recommended that five members be taken from private sector on the seven-man privatisation board besides the ex-officate members of the board. He invited Ajmad Rafi, President KCCI to join him as board member. Ajmad Rafi accepted the invitation.

The PC chairman said that the government was facing some pressure from the money lending agencies for privatisation of government owned units.

He noted that in the last nine years 103 units were privatised, which generated Rs 60 billion out of which 10 billion were spent on privatisation process including golden hand-shake. These units were inflicting one billion rupees losses annually on the government exchequer.

He said that Karachi Electric Supply Corporation (KESC) was incurring a loss of Rs 9 billion a year. KESC needs 1.3 billion dollars for its re-habilitation and re-structuring. The government had already spent Rs. 34 billion on re-structuring KESC, he added. The government therefore, has no option but to increase KESC tariff before its privatization.

Likewise, Pakistan Railways is sustaining Rs 6 billion loss annually. It owns Rs 22 billion depo. and has 560 locomotives out of which 60 are in good running condition and 360 are 35 years old.

Regarding privatization of gas companies, he said that the buyers were interested in knowing the position of gas reserves and gas pricing formula for the next few years. A gas regulatory authority has been formed to devise a gas pricing formula and decide other related matters, he noted, while a foreign firm has been engaged to estimate gas reserves in the country.

The PC chairman said that there was pressure for early privatization of Pakistan State Oil (PSO). In this respect it was decided that the government owned units having liabilities against other government organisations would be privatized after they had cleared organisation-to-organisation liabilities.

Replying to a question, he said, "It is estimated that the government will get eight billion dollars from the privatisation of government owned units." The government is framing laws to use sales proceeds for debt retirement only," he noted

He also clarified that the all Pakistanis are eligible to take part in privatization process and submit bids for it.

He said there were around four million Pakistanis working abroad having 60 billion dollars assets. The government was trying to attract them to invest in Pakistan

Welcoming the guests, Amjad Rafi, KCCI President, said that privatisation could fall into two categories, one of those enterprises that would generate cash on sale and the other of those enterprises which would not provide cash but would stop further losses to the exchequer.