The Cabinet Committee on Privatisation has stalled the sale of 10 percent shares of the Oil and Gas Development Company Limited (OGDCL), the largest energy firm in Pakistan, after receiving lukewarm response from the local and international investors to its ambitious agenda of privatisation. The government had offered 311 million shares for sale,but received offers for only 162 million shares – or 52 percent of the total shares – from investors at the conclusion of a three-day bidding process. Sources claim that the government is trying to meet the terms of the International Monetary Fund (IMF), which wants reforms in the energy sector, expansion in the tax net and privatisation of the state-owned industries to meet the conditions of a $6.7 billion bailout package.
According to Finance Minister Ishaq Dar, the offers for the floor price of the shares were tooinappropriateto accept them as the OGDCL has already incurred losses up to $150 million due to decline in its share price and slump in oil prices on the international level. However, Dar also holds Pakistan Tehreek-e-Insaf chief Imran Khan and Pakistan Awami Tehreek leader TahirulQadri responsible for poor response to the share offers.
The IMF has already approved a $1.1 billion loan for Pakistan, overlooking the postponement of the OGDCL sale and it is good opportunity for the government to look for other options to raise the much-needed funds for the development of infrastructure and energy sectors. The government is also planning to sell State Life Insurance Corporation of Pakistan and Murree Gasto fetch $4 billion, butexperts raise eye-brows on the sale of profit-making organisations which they see as the national assets. Instead, they want the government to concentrate on curtailing corruption and improving security situation in the country to attract local and foreign investment.
In the current situation, oil prices are falling at the international level and 30 percent profitability of oil exploration and production companies have already been washed away.It will be a wise decision if the government puts the sale of OGDCL on hold until the oil prices are stabilised in the world market.