Oct. 9 (Bloomberg) -- Pakistan plans to shortlist as many as 15 state-run companies for stake sales as Prime Minister Nawaz Sharif seeks to trim losses and raise cash to meet terms of a $6.6 billion loan from the International Monetary Fund.
The government may sell as much as 10 percent of its stakes in National Bank of Pakistan, Habib Bank Ltd., United Bank Ltd., Oil & Gas Development Corp., and Pakistan Petroleum Ltd. within the next 12 months, Privatization Minister Khurram Dastgir Khan said in an interview. It also seeks to sell stakes in national carrier Pakistan International Airlines Corp. and Pakistan Steel Mills Corp. to strategic investors, he said.
“We want to do these privatizations very lawfully and transparently,” Khan said in Islamabad yesterday. “That will attract foreign investors, and they would realize that Pakistan is not just energy crisis and extremism. There are parts of the economy which are still humming.”
Sharif, who took power in June, last month won IMF support for his efforts to revive an economy crippled by chronic energy shortages and a Taliban insurgency. His government is pushing forward with a delayed plan to privatize more than 60 public sector enterprises, which Khan said are costing tax payers nearly $5.5 billion per year in subsidies and losses.
“It’s a massive drain on the exchequer,” he said. “It’s severely impairing our ability to invest in health and education.”
Pakistan’s budget deficit touched a two-decade high of 8.8 percent in the fiscal year ended June 30. The government now spends 20 percent of its 3.985 trillion rupees ($38 billion) federal budget on health and education, compared with 16 percent on its military.
The companies Khan named for privatization account for about a third of the Karachi Stock Exchange Index’s market value, according to data compiled by Bloomberg. He did not specify the other companies, saying the list is still being completed and would be submitted to a cabinet committee later this month.
Khan did not specify which other companies would be shortlisted for share sales. The government will seek bids in the next two months for financial advisers who will recommend how to structure the deals, he said.
--Editors: Daniel Ten Kate, Sunil Jagtiani