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November 16, 2019

SME Bank’s sell-off approved ; body formed to sell PIA assets


November 16, 2019

ISLAMABAD: Government on Friday approved the privatisation of SME Bank Limited and constituted a task force to ensure early disposal of the Pakistan International Airlines’ (PIA) properties, including the Roosevelt Hotel in New York and Hotel Scribe in Paris.

The Cabinet Committee on Privatisation (CCoP) took the decisions during a meeting presided over by Adviser to Prime Minister on Finance and Revenue Hafeez Shaikh.

The CCoP approved the transaction structure submitted by Privatisation Commission for the privatisation of SME Bank as decided by an earlier CCoP meeting in October last year. Earlier, the meeting was told that a transaction committee constituted by the commission had reviewed and recommended the transaction structure. The committee comprises of the commission’s board members and officials from finance division, State Bank of Pakistan and SME Bank, which met four times before coming up with a comprehensive transaction structure put to CCoP for consideration and approval. The meeting was also informed about the pre-qualification criteria reviewed and approved by the commission board for the prospective bidders.

The task force has a mandate to examine and process all the formalities for an early disposal of the PIA properties. Headed by Minister for Privatisation Muhammad Mian Soomro, the task force includes Special Assistant to Prime Minister on Overseas Pakistanis Zulfiqar Abbas Bukhari, Secretary Privatisation Commission and Additional Secretary Ministry of Finance as well as legal and financial consultants on the Roosevelt Hotel Corp and any other official deemed necessary to be co-opted by the task force.

The CCoP also instructed the PIA management to present in its next meeting the findings of the feasibility study conducted by it in pursuance of a CCoP decision earlier this year to carry out an appraisal of various management and financial options for gaining optimal returns from the Roosevelt Hotel.

The cabinet committee further directed the PIA management to update it on monthly basis regarding the progress of the work and also advised the airline management to carry out its plan in coordination with the aviation division.

The CCoP rejected a proposal by the commerce division for delisting from privatisation of a 15-acre plot situated in an industrial area in Multan. The meeting said the privatisation of the asset in question would go ahead as already decided by the government. The commerce ministry proposed that the plot could be utilised more efficiently for some other purpose rather than being sold at a possibly low price.

However, it was decided that Adviser to the Prime Minister on Commerce Razak Dawood would closely scrutinise the reference price at the bidding stage to see if it matches the value of the plot. The commerce ministry was directed to come up with an elaborate alternative plan detailing various aspects of the opportunity cost to use the plot, lying idle since 2011, quickly and efficiently.

The meeting did not agree to the proposal from Earthquake Reconstruction and Rehabilitation Authority (EERA) for delisting of its 17 properties from the 32 assets being processed for sale by the commission.

The CCoP took up a proposal from EERA for the delisting of 17 properties until June 2020 when the EERA would be subsumed into the National Disaster Management Commission as per a government decision already taken to transform National Disaster Management Authority into a vibrant and self-sufficient entity.

The EERA viewed that deferring the privatisation of its assets till June 2020 would allow sufficient time for a possible legislation for incorporating these properties into the National Disaster Management Fund.

The commission told the CCoP that the 17 properties belonging to EERA had been picked up for privatisation in pursuance of a federal cabinet decision in March this year and subsequent identification by an inter-ministerial committee constituted by the Prime Minister of 32 properties belonging to nine ministries, divisions and organisations.

The meeting was told that a financial adviser was hired for the sale of the 32 properties and withdrawal as being proposed by the EERA would adversely affect the whole privatisation process besides sending negative signals to potential buyers and investors.

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