NA panel okays tweaks to privatisation law

ISLAMABAD: The National Assembly Standing Committee on Privatisation Monday approved amendments to the Privatisation Commission Ordinance, 2000, including establishment of an appellate tribunal to handle civil and criminal matters, aiming to reduce delays in privatisation transactions.

The Privatisation Commission (Amendment) Bill, 2023, will be presented in the National Assembly for approval. The need for an appellate tribunal arose due to increasing legal disputes and delays caused by the concurrent jurisdictions of various high courts. Currently, sections 28 to 33 of the ordinance grant exclusive jurisdiction to high courts for adjudicating matters under the ordinance, resulting in numerous petitions and significant delays in the privatisation process.

The proposed privatisation appellate tribunal aims to streamline the resolution of legal issues related to privatisation, ensuring adherence to due process and principles of natural justice. The NA Standing Committee on Privatisation, chaired by MNA Farooq Sattar, received a briefing from the Ministry and Privatisation Commission.

According to the Ministry of Privatisation, a total of 129 cases are pending across various courts, including the Supreme Court of Pakistan, and the high courts of Sindh, Lahore, Balochistan, Peshawar, and Islamabad, as well as civil and labour courts.

The formation of the privatisation appellate tribunal, which would have the power of a civil court, is seen as a crucial step to address these legal bottlenecks, providing a dedicated platform for resolving disputes and facilitating a smoother privatisation process in Pakistan. Aggrieved parties may appeal to the Supreme Court within 60 days of an appellate tribunal’s order.

Minister for Privatisation Abdul Aleem Khan, Secretary Privatisation Division Jawad Paul, and Secretary to the Privatisation Commission Usman Akhtar Bajwa briefed the panel.

Secretary to the Privatisation Commission Usman Akhtar Bajwa said the Pakistan International Airlines (PIA) required an investment of $400 million to $500 million to address its financial woes. Bajwa attributed the airline’s failure to secure these funds to ongoing management issues. “We will take one of the commitments from the bidder to invest this amount,” Bajwa said.

The government is pushing for privatisation as part of its strategy to inject fresh capital and expertise into the PIA, aiming to turn around the state-owned carrier. Six prequalified bidders have commenced due diligence and have been granted access to PIA’s data room as part of the privatisation process.

An earlier attempt to privatise the national flag-carrier in 2015 failed, and since then, the PIA accumulated additional losses of Rs500 billion, raising its total liabilities to Rs830 billion from Rs200 billion at that time. “There is a cost of not taking a decision on time,” Bajwa said.

In response to questions about the absence of bids from Gulf airlines, Bajwa explained that these airlines view the PIA as a competitor. He noted that if the PIA enhances its service on routes to Europe and the UK, it could negatively impact the airlines of the Gulf region, which primarily handle transit flights to Europe while PIA offers direct routes.

Bajwa also highlighted that the revival of PIA’s European and UK routes was expected to be completed by the end of this year, with ongoing government efforts to restore these services.

The chairman of the committee questioned why Foreign Minister [Ishaq Dar] has been appointed as the chairman of the Cabinet Committee on Privatisation (CCoP) instead of the privatisation minister. In response, Privatisation Minister Abdul Aleem Khan explained, “It is better, as he is the deputy prime minister.”

The committee also inquired why the House Building Finance Company (HBFC) is being privatised when it has a profit of Rs3 billion. Aleem Khan replied that the company is not engaging in any tangible business and has not lent a single rupee for house building. Instead, it deposits money in banks to earn profit, borrowing from the State Bank and depositing in commercial banks to make a profit.

Notably, on July 10, 2023, the CCoP approved the sale of HBFC to Pakistan Mortgage Refinance Company and ratified by the federal cabinet on July 26, 2023. The Privatisation Commission is finalising the terms of the share purchase agreement.

Secretary Ministry of Privatisation Jawad Paul emphasised the need to privatise loss-making commercial enterprises and even some profitable ones to reduce the government’s footprint in business. He noted that 24 entities are ready for privatisation, with another 41 set to be reviewed by the CCoSOEs in its next meeting to determine their inclusion in the privatisation list. The program will include non-strategic state-owned enterprises (SOEs).

Entities on the current privatisation list include: First Women Bank Limited (FWBL), Zarai Taraqiati Bank Limited (ZTBL), Pakistan Engineering Company Limited (PECO), Sindh Engineering Limited (SEL), Islamabad Electric Supply Company (IESCO), Faisalabad Electric Supply Company (FESCO), and Gujranwala Electric Power Company (GEPCO). Others are Pakistan Re-Insurance Co. Ltd. (PRCL), State Life Insurance Co. Ltd. (SLIC), Utility Stores Corporation (USC), GENCO-I, GENCO-II, GENCO-III, GENCO-IV, Lahore Electric Supply Company (LESCO), Multan Electric Supply Company (MEPCO), Hazara Electric Supply Company (HAZECO), Hyderabad Electric Supply Company Limited (HESCO), Peshawar Electric Supply Company (PESCO), and Sukkur Electric Power Company (SEPCO).

The commission is also exploring options for Distribution Companies (DISCOS), including privatisation, long-term concessions, and retention. Out of 11 DISCOS, six have been recommended for privatisation, including IESCO, FESCO, GEPCO, LESCO, MEPCO, and HAZECO, while three are recommended for long-term concessions, namely HESCO, PESCO, and SEPCO.