Pakistan Hopes for Privatization Forex Boost

Pakistan is hoping a sell-off of government stakes in state-owned energy companies, banks and troubled airline PIA will bring a much-needed boost to foreign exchange reserves, a top official said Friday.

Prime Minister Nawaz Sharif's privatization program cleared an important hurdle this week with the approval of financial advisers for the sale of shares in more than half a dozen state-owned companies.

Pakistan last month received a second payment under a $6.7 billion International Monetary Fund (IMF) loan package, conditions for which included action to privatize state-owned businesses.

Among the offerings will be shares in the Oil and Gas Development Company Limited (OGDCL), Pakistan's top hydrocarbon exploration and development concern.

OGDCL shares have been traded on the London stock exchange since 2006 and the government now wants to sell off more of its stake in the company.

"We will wait the financial advisers to make the privatization strategy but I personally want to offload 10 percent... of OGDC at the global capital market," Mohammad Zubair, the chief of the Privatization Commission, told Agence France Presse.

The state holds about 75 percent shares in the OGDCL, after already offloading a 25 percent stake.

Arif Habib Securities, a Karachi-based brokerage and financial research company, estimates the OGDCL sell-off will raise about $1 billion.

Pakistan's forex reserves have dwindled in the past year, sinking to just $3.2 billion, barely enough to cover the country's foreign payments for a month.

Opposition parties have condemned the privatization plans, accusing Sharif of cronyism and selling off valuable national assets at cut price.

But Zubair insisted the scheme was necessary.

"We will get two-pronged benefits: one is to revive our presence in the global market by holding roadshows and then offloading the shares, and on the other will have much needed foreign exchange," Zubair said.

Besides OGDCL, the government intended to sell 20 percent shares of Habib Bank Limited, the largest Pakistani bank, in local and international markets.

"Likewise we intend to sell 10 percent of HBL in global market and 10 percent at the local stock exchange," Zubair said.

Government shares in United Bank Limited, Allied Bank Limited and Pakistan Petroleum Limited will also be offloaded.

The commission board has already approved selling a 26 percent stake in Pakistan International Airlines, the national flag carrier and a financial adviser is to be appointed by March.

The privatization transactions are likely to be carried out before the end of the year but Zubair said they would not scrimp on safeguards.

"We want a speedy but highly transparent process and we are expect to furnish all the deals this year," the chairman of the commission said.

Cash-strapped Pakistan, plagued by a bloody homegrown Taliban insurgency, is battling to get its shaky economy back on track and solve a chronic energy crisis that cripples industry.