Strategic sale of profitable SOEs to foreign investors being considered

ISLAMABAD: The government is working on a plan for strategic sale of shares of profitable state-owned enterprises (SOEs) to woo foreign investors and improve the country’s foreign exchange reserves.

The entities, whose shares are being considered for “strategic sale” include the Oil and Gas Development Company Limited (OGDCL), Pak Refinery Limited (PRL), Pakistan Petroleum Limited (PPL), Pakistan State Oil (PSO), Sui Northern, Sui Southern and others.

Explaining the term “strategic sale”, an informed source said that the government intends to offer in bulk 10 percent, 15 percent or 20 percent shares of these entities to “strategic buyers”. In bulk, it is said, sale of 10 percent to 20 percent shares of the profit making entities to “strategic buyers” could bring a good amount of foreign exchange in the country.

As against normal prices of shares of such entities, bulk shares can be sold at better rates for which the government has to work on evaluating the prices of shares of different public sector entities for strategic buyers.

“We are presently doing the groundwork,” said the source, who is highly placed and included in top level decision making on issues of investment and finance. He said that the government expects that Pakistan can bring foreign shareholding into the country by offering strategic sales of shares of its profit making entities.

Such government entities are divided into tier one and tier two categories. Those making good profits like OGDCL, PSO, PPL are being included in tier one category. Already, according to media reports, Saudi Arabia has offered to buy 15 percent stakes in the Reko Diq mining project besides assuring to give a substantial grant to build infrastructure around the mining area in a development.

It is reported by the media recently that in response to the Saudi offer, Pakistan has decided to constitute a negotiation committee that will review the Saudi offer and recommend the final negotiated price to the federal cabinet for approval.

It is said that Saudi Arabia’s Public Investment Fund (PIF) has offered to acquire 15 percent shares through Manara Minerals. The federal government currently holds 25 percent shares in the Reko Diq mining project and out of its share it would sell 15 percent stakes to Saudi Arabia.

According to a newspaper report, in addition to acquiring 15 percent shares, Saudi Arabia has also offered to give grants for the construction of road infrastructure around the Reko Diq mining project. The government wants to construct the Mashkhel-Panjoor road for smooth movement around the mining area.

The Ministry of Economic Affairs, the report added, has taken up a grant offer with the Saudi Fund for Development (SFD) for finalising the road scheme.