Qadirpur Gas Field up for sale

ISLAMABAD - Pakistan has geared up its dormant privatisation process by resolving to privatise Qadirpur Gas Field, one of the largest state-owned gas fields of the country, despite lack of investors' appetite in the given economic scenario of the world.

Officials claimed that the International Monetary Fund (IMF) had asked the government of Pakistan to privatise national silver at an accelerated pace as a pre-condition of its bailout programme for the country's economy described to be fast melting down.

However, Privatisation Minister Syed Naveed Qamar rebutted the claim during a press conference here Friday saying that it was purely an indigenous decision in the best national interests of the country and the people of Pakistan.

"Whether or not it is part of the IMF conditionality, I could assure you that the decision to privatise 37 per cent strategic shares of the Qadirpur Gas Field with transfer of management control is our homegrown project," the Minister responded to a questioner claiming that the government was doing so as it was being asked by the IMF.

The Minister also disagreed with another questioner reminding him the promise of the PPP's previous government during 90s that the national silver entities that included Qadirpur Gas field (OGDC) as well would not be given into the private hands. To a question on the timeline of the gas field's privatisation the Minister said that the Privatisation Commission would try to close this transaction within the current financial year ending June 2009. However, he rushed to add that a number of issues were to be resolved before even going for the marketing of the Qadirpur.

"It is just that we have obtained permission from the Cabinet Committee on Privatisation with Prime Minister Yousuf Raza Gilani in chair, therefore questions of furtherance were premature," he said.

Answering the question of political opposition even from within the ruling PPP, the Minister said, "Neither national interests nor that of the Sindh province would be compromised at any cost," he added.

While listing down the issues to be addressed for making the gas field ready for privatisation, the Minister said an unprecedented guarantee to jobs associated with the gas field by the government would be on top of them. Among other issues to be addressed before embarking upon the marketing of the gas field, the Minister included the price of gas, the consumer interest, determination of lease period for life of the field or otherwise, existing shareholders first right of refusal, and above the post privatisation regulatory issues.

Earlier, a handout form the Prime Minister's Secretariat stated the Cabinet Committee on Privatisation (CCOP) gave go ahead for initiating the process for the privatisation of 37 per cent shares of Oil & Gas Development Company Limited's (OGDCL) Qadirpur Gas Field with transfer of operational control. The CCOP also allowed the bidding of Heavy Electrical Complex (HEC) and Small & Medium Enterprises (SME) Bank.

The Prime Minister directed the Ministry of Privatisation and the Privatisation Commission to ensure that concerns of all should be addressed before the privatisation of Oil & Gas Development Company Limited's (OGDCL) Qadirpur Gas Field and that all stakeholders should be taken on board. He 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 Prime Minister further directed the Ministry of Privatisation and the Privatisation Commission to exercise utmost transparency at all levels while executing the transactions and efforts should be made to get maximum proceeds from the process.

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 per cent 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 Limited' 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 Handshake Scheme (GHS) for permanent workers and Voluntary Separation Scheme (VSS) for the executives will be shared equally between the new buyer and the Privatisation Commission. The bidder shall bid on the basis of audited accounts of June 2006 and may also factor the latest un-audited accounts available prior to the bidding.