The board of the Privatization Commission (PC) has approved the transaction structure for the privatization of Pakistan Steel Mills. The board is all set to establish a subsidiary to sell out a majority of its stakes.
According to an assessment of the financial adviser hired for the process, the investors may need to inject $1.4 billion over a period of three years, including $580 million upfront for the revival of the state-owned company.
The Federal Minister for Privatization, Mohammad Mian Soomro, chaired the PC board session which revolved around two options including the establishment of a wholly-owned subsidiary and then selling the majority of its stakes or leasing the unit for 30 years.
The meeting, however, agreed upon the first option and began proceedings in this regard. Officials of the board say that the potential investor could be offered 51% to 75% shares in the new subsidiary but the final decision will be made by the Cabinet Committee on Privatisation (CCOP).
After deciding in principle to privatize the country’s largest but closed industrial unit in June last year, the federal government spent an entire year in official proceedings. Even now, the government took three months to appoint a financial adviser for the matter.
Govt to Divest Shares in PPL & OGDCL
The privatization board also discussed divestment of up to 10% shares of the government in Pakistan Petroleum Limited (PPL) and up to 7% shares in Oil and Gas Development Company Limited (OGDCL). After extensive discussion, the board decided to hire Financial Advisors Consortium (FAC) for the divestment plans.
The PC board decided that the process of hiring FAC for OGDCL will be started after PPL. It will also obtain proposals from FAC for documented as well as undocumented modes of transactions.
Due to the exorbitant financial bid submitted by the top-ranked consortium earlier, the PC board decided to re-invite the EOIs for the hiring of financial advisers for the privatization of the Guddu Power Plant.
The Ministry of Privatization is going to commence the auction of properties owned by the Federal Government of Pakistan from 7th September 2020.