CCoP to decide on sale of government stake in PRCL

ISLAMABAD: The Privatisation Commission (PC) Board has decided to move the Cabinet Committee on Privatisation (CCoP) to break a multi-year long deadlock on the divestment of the government’s 20 percent shareholding in Pakistan Reinsurance Company (PRCL), The News learnt on Monday.

The PC board would seek a binding promise from the State Life Insurance Company (SLIC) to not sell its shareholding in PRCL without prior approval so that the government’s majority shareholding in PRCL could be maintained.

It is to be noted that the government of Pakistan currently holds 51 percent shares in this sole reinsurer company, SLIC 24.4 percent shares National Bank of Pakistan (NBP) 3.9 percent, and the general public has a 20.7 percent stake in the PRCL.

In 2019, the CCoP had approved the divestment of 20 percent government’s shares in the PRCL through Secondary Public Offering (SPO), but the transaction did not materialise, over concerns that if the government divested 20 percent of out of 51 percent stake and later SLIC also followed the suit the government’s shareholding (direct and indirect) in the company will be reduced to minority.

The PC board that met here with Federal Minister/Chairman Privatisation Commission Abid Hussain Bhayo in chair, endorsed the proposal that PC would seek the approval of the CCoP on this issue. Federal Secretary Dr Iram A Khan, Board members, and senior officials of the ministry attended the important meeting.

There has been no consensus among stakeholders including the Ministry of Commerce, PC, the Securities and Exchange Commission of Pakistan (SECP), and SLIC regarding maintaining the majority shareholding of the government even after the divestment of 20 percent shares of PRCL.

An official told The News that in order for the government to maintain management control or majority shareholding in PRCL, the SLIC had to make a binding agreement that it wouldn't divest its shares unless it sought the requisite approval from PRCL. “The matter rests with SLIC and of course the Ministry of Commerce,” sources said.

It is to be noted that in September last year, the board had also approved the pricing mechanism (Floor Price) for divestment of these shares in the PRCL.

The board was also apprised about the current status of Pakistan Steel Mills (PSMC) and some unresolved matters regarding its revival. The PC Board deliberated on those bottlenecks and sought an early resolution of these matters, involving all the stakeholders, from the federal government at the earliest.

The PC Board’s approval was sought regarding the strategy to resolve different issues of Sindh Engineering Limited (SEL) and Pakistan Engineering Company (PECO), which have blocked their privatisation.

It is to be noted that the 488-acre land which was a property of SEL, but due to the complex litigation, has become disputed and hence one of the major hurdles in the privatisation of the entity.

The PC board was briefed that the constitution of SEL Board and the appointment of a permanent MD would enable the implementation of necessary decisions with regard to its privatisation. The Board members proposed that the matter may be placed before CCoP in its upcoming meeting.

Officials also briefed the board on the privatisation of House Building Finance Company Limited (HBFCL). They said that PC along with Financial Advisers were engaged in the marketing exercise of the entity.

The fresh expression of interest-EOI/statement of qualification-SOQ has been advertised with respective deadlines of October 17 and 31, 2022. In January 2022, the commission published EoIs for HBFCL with the aim to complete the transaction in June 2022, but it did not materialise and now again EoIs have been published.

“The decision to advertise the EOI afresh was taken to make the transaction more competitive and transparent,” the official PC statement said.