IMF-dictated law to enable G2G deals for sale of SOEs

ISLAMABAD: The Inter-Governmental Commercial Transaction Bill 2022, which recently passed the lower house of the parliament, will pave the way for the smooth selloff of state-owned enterprises (SOEs) and the government’s shares in publicly-owned entities, helping raise $2 to $3 billion, officials said on Monday.

According to an IMF assessment, Pakistan requires $34.9 billion in order to meet its external financing requirements during the FY2023. The upper house of the parliament or the Senate is yet to give its nod to convert this bill into an act. Once a law, it will allow the government to sell off two RLNG plants through government-to-government (G2G) deal and fetch over $2 billion.

“It is part of the IMF programme whereby the government will be able to bridge the external financing gap by selling out its assets through G2G deals,” a top official source said while talking to The News here on Monday.

As the privatisation programme failed to yield the desired results, the government proposed fundamental changes in the law to streamline the procedure of selling off important assets of the country. The new law will also allow a buy back facility that will enable the government to reacquire the sold assets after paying incremental profit in the range of 5 to 7 percent.

The federal government may enter into a G2G agreement with the government of a foreign state soon after the bill becomes an act. The G2G agreement under sub-section (1) shall include broad parameters and mechanism for execution of intended commercial transactions.

Unless provided otherwise by the Cabinet Committee, a commercial agreement under the G2G agreement shall be negotiated and executed between the nominated entities of the federal government and the government of the foreign state.

In the case of an entity nominated by the government of the foreign state, that government shall have either shareholding or control of the entity. The federal government shall, by notification in the official gazette, constitute a cabinet committee on Inter-Governmental Commercial Transactions.

The cabinet committee may authorise negotiations for a G2G agreement between the federal government and the government of a foreign state; constitute a negotiation committee for a G2G agreement or a commercial agreement, as the case may be, and approve price discovery mechanism; recommend approval of the G2G agreement or a commercial agreement finalised by the negotiation committee; recommend for relaxations, exemptions, exclusions or concessions from regulatory compliance; authorise fast track procurement of services of transaction advisors or consultants; and take such decisions necessary for expeditious execution of the commercial transaction: Provided thatthe decision taken under clauses (c) and (d) of sub-section (2) by the cabinet committee shall be placed before the Federal Government for approval.

The cabinet committee shall facilitate and supervise the commercial transactions under this Ordinance and pass necessary directions for removal of hurdles or difficulties. The committee may co-opt any person as a member or may require attendance of any person by special invitation as it deems appropriate. No act, decision or proceedings of the Cabinet Committee shall be invalid by reason of absence, vacancy or defect in the constitution of the cabinet committee.

The federal government may issue appropriate directions to a provincial government, local government, agency or authority concerned to implement the objective of the inter-governmental commercial transaction including land acquisition, rehabilitation and resettlement, provision of utility services, construction of approach roads to the main highways and such other activities of similar nature. A direction issued under sub-section (1) shall be binding.

The federal government on the recommendation of the cabinet committee may, by notification in the official gazette, exempt any inter-governmental commercial transaction from the regulatory requirement or operation necessitated by any law for the time being in force for the purposes of this ordinance. If a person acting on behalf of the federal government or nominated entity has direct, indirect, or perceived personal interest in any agreement under this Ordinance, that person shall immediately disclose such interest in writing to the cabinet committee; and not take part in any consideration on that matter unless the cabinet committee directs otherwise.