CCoP okays bidding of 37% shares of Qadirpur Gas Field

[Naveed Yaseen]

* Prime minister also allows bidding of Heavy Electrical Complex and Small and Medium Enterprises Bank

By Zafar Bhutta

ISLAMABAD: The Cabinet Committee on Privatisation (CCoP) gave a go ahead signal for initiating the privatisation process of 37 percent shares of Oil and Gas Development Company Limited’s (OGDCL) Qadirpur Gas Field with transfer of operational control.

The cabinet committee that met here on Friday under the chairmanship of Prime Minister Syed Yousuf Raza Gilani also allowed the bidding of Heavy Electrical Complex (HEC) and Small and Medium Enterprises (SME) Bank.

After the meeting of CCoP, Federal Minister for Privatisation Syed Naveed Qamar said that the government would address the reservations of all stakeholders and no decision would be taken at the cost of Sindh and Pakistan interests. The minister also said that the 37 percent sale of Qadirpur Gas Field shares would be completed during the current financial year.

He also ruled out that the privatisation of the Qadirpur Gas Field was pre-conditioned with IMF and said that the government would privatise 37 percent shares of the Qadirpur Gas Field after removing the reservations of all stakeholders.

The minister said that the CCoP had accorded approval to initiate the process of privatisation of 37 percent shares of Qadirpur Gas Field and however added that the government would hold talks with all stakeholders including the employees of the OGDCL. The government would also take into confidence the cabinet and Parliament to privatise the shares of the Qadirpur Gas Field.

He said that ODGCL was holding 75 percent shares of Qadirpur Gies Field whereas the multinational companies owned 25 percent shares of the said gas field. He said that even after privatising the 37 percent shares of the said gas field, ODGCL would own 38 percent shares that would ensure the future benefits of unknown gas reserves for the government.

He said that CCoP had considered three options including privatisation of OGDCL, sale of shares in the stock market and third portion was to sell the assets of the OGDCL. However the CCoP concentrated on the sale of 37 percent shares of Qadirpur Gas Field keeping in view of the current market situation. He said that the government would hold the market road shows to attract the potential international investors for the 37 percent shares sale. He also said 25 percent share holders of the Qadirpur Gas Field would also be eligible to participate for getting the 37 percent shares of the gas field. The government would make the part of the agreement with new operator of the Qadirpur Gas Field to protect the interests of the employees. He said that after the privatisation of the gas field the government would ensure the provision of the incentives to the employees.

He said that the main issue was the fixing of gas price during the privatisation of the gas field and the government would ensure that the current regulation process of the gas pricing should continue even after the sale of 37 percent shares of the gas field. He further said that government would also ensure that the new operator of the gas field should bring investment to enhance the gas production so that the gas load shedding issues could be addressed.

He further said that the other issue was the lease time and lease time of the gas field was being expired and the government would work to give the gas field on lease on long-term basis. He said that no investor would come on short-term basis of lease time. OGRA and petroleum Ministry would work in this regard. The targets would be fixed and penalties would be making the part of the agreement if the new operator did not meet the set targets.

The minister said that the government would also ensure the strong regulation during the privatisation of the different state run entities. The process of SMEs Bank privatisation would be completed in the next month said that the payment of arrears of Hazarah Phosphate was due on November 25 and the process of privatisation of motels under PTDC was under way.

According to a statement issued, the Prime Minister directed the Ministry of Privatisation and the Privatisation Commission during the meeting to ensure that concerns of all should be addressed before the privatisation of OGDCL’s Qadirpur Gas Field and that all stakeholders should be taken on board. The PM instructed that quality players should be brought in for increasing the drilling activity and accelerating the exploration activity for increasing the production at Qadirpur Gas field. The PM further directed the Ministry of Privatisation and PC to exercise utmost transparency at all levels while executing the transactions and efforts should be made to get maximum proceeds from the process. Level playing field should be provided to all potential investors and quality players should be associated in the process for improving the efficiency, bringing in fresh investment and modern technology to ensure expansion in the transactions after their privatisation for creating new job opportunities, ensure jobs of existing employees and enhancing the production. The employees should not be disturbed, he emphasised.

The agreed severance package with SME Bank employees and valuation of

SME Bank was also approved by the CCoP. The salient features of the transaction include divestment of 93.88 percent GoP shareholding along with transfer of management control. The SME Bank has an unrestricted commercial banking license. The potential buyer will have to retain the name ‘SME Bank Ltd’ for one-year post privatisation. The charter of SME Bank to be maintained for at least three years post privatisation. GoP will keep the right to appoint at least one director on the board of directors of SME Bank post privatisation. The CCoP also approved the valuation of Heavy Electrical Complex (HEC) and directed the PC to proceed ahead with its bidding process. The PC will convey the terms and conditions relating to privatisation of HEC to all the bidders. Information memorandum, bid documents and time frame for bidding date will be provided to those pre-qualified parties only who will deposit earnest money to become eligible for participating in the bidding.

The purchaser shall continue to operate company’s manufacturing facility and shall not in any way abandon, cease to operate or otherwise shutdown the existing company manufacturing facility. The cost of Golden Hand Shake Scheme (GHS) for permanent workers and Voluntary Separation Scheme (VSS) for the executives will be shared equally between the new buyer and the PC. The bidder shall bid on the basis of audited accounts of June 2006.

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