Press Release
Pakistan to Seek $2 Billion From Bank Share Sales, Oil & Gas Exchangeable Bonds-Syed Naveed Qamar
Islamabad, February 25, 2011
Pakistan plans to raise as much as $2 billion from holdings in the nation's largest banks and energy companies and from Oil & Gas Development Co. exchangeable bonds, according to Privatisation Minister Naveed Qamar during an interview yesterday with a foreign Cable News Network (Bloomberg).
"The government will offer some of its stock in National Bank of Pakistan, Habib Bank Ltd., Pakistan Petroleum Ltd. and electricity producer Kot Addu Power Co. to local investors, Qamar said in an interview in the capital, Islamabad, yesterday. OGDC will market equity-linked bonds internationally, with the proceeds used to cut the budget deficit", he said.
"The market is now ready to be tested," said Qamar, 55, who was appointed to a new streamlined Cabinet this month under a drive to cut spending. "The perception of Pakistan may be a factor in attracting investors, but if you look at the balance sheets of these companies, they are doing quite well."
The News Network commented that "Pakistan's new ministers are trying to revive a $167 billion economy which has been battered by militant attacks and the nation's worst monsoon flooding. The government forecasts the deficit may widen to 8 percent of gross domestic product in the year ending June 30, up from 6.3 percent a year ago".
It further says that "the bond sale, Pakistan's first to international investors in more than three years, has been under consideration since 2008 and delayed many times as political unrest and terrorist attacks deterred potential buyers".
The government is the largest shareholder in OGDC, and will pledge its stock to guarantee the notes as part of an effort to raise between $500 million and $1 billion, he said.
Share Sales
Pakistan may raise a further $1 billion from the share sales, some of which will be completed in the current fiscal year that ends in June, according to the minister.
Shares in OGDC, the nation's biggest energy explorer, rose 34 percent in the past 12 months compared with a 17 percent increase in the benchmark Karachi Stock Exchange index.
Emirates Telecommunications Corp., the United Arab Emirates' largest telephone company, will pay Pakistan $800 million "very soon" under a deal to acquire a stake in Pakistan Telecommunication Co., Qamar said.
Etisalat, as the U.A.E. Company is known, agreed to buy a 26 percent stake in Pakistan's biggest telephone service provider in 2006 for $2.6 billion. Though it withheld part of the payment due to a dispute over transferring property titles, the matter has been resolved, Qamar said.
Pakistan may end a five-month freeze on its domestic fuel prices as oil surged to the highest in almost 30 months after Libya's violent uprising cut supplies, Privatization Minister Naveed Qamar said.
Pakistan hasn't raised gasoline prices since October as the government of Prime Minister Yousuf Raza Gilani struggles to control inflation above 14 percent and pacify coalition partners that have threatened to quit the government if fuel becomes more expensive. Keeping prices unchanged, the government lost 13.5 billion rupees ($160 million) in duty revenue from December to February, according to ministry of finance estimates.
"I don't think any government can afford to keep subsidizing the prices," Qamar, who was the petroleum minister before the Feb. 11 Cabinet reshuffle, said in an interview in the capital, Islamabad, yesterday. Qamar is also a member of the government team negotiating a program of economic policy changes with the main opposition, led by former Prime Minister Nawaz Sharif. "At some point, the prices have to be passed on. There has to be some understanding of the issue. We can't just take a populist stance that no price should ever be raised."
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