ISLAMABAD: Cabinet Division has reportedly sought federal cabinet’s endorsement of public sector entities sell-off decisions taken by the Cabinet Committee on Privatisation (CCoP) from 2014 onward, well informed sources told Business Recorder.

Recently, Supreme Court of Pakistan set aside a decision of the Prime Minister for withdrawing exemption on sales tax to the companies, importing cellular phones and textile goods in the country.

The apex court held that the federal government is the collective entity described as the cabinet constituting the Prime Minister and Federal ministers.

“Neither a Secretary, nor a Minister and nor the Prime Minister are the Federal Government and the exercise, or purported exercise, of a statutory power exercisable by the Federal Government by any of them, especially, in relation to fiscal matters, is constitutionally invalid and a nullity in the eyes of the law,” SC said in the judgment.

According to a summary to be considered by the federal cabinet, in its meeting on August 31, 2016 under the chairmanship of Prime Minister, Nawaz Sharif, the cabinet its meeting held on August 5, 2009 decided as under follows “in future decisions taken by the ECC and other committees of the cabinet will be circulated to all the Ministers, these decisions, will, however, be submitted to the cabinet for information and if considered necessary, the decisions would be discussed”.

Subsequently, the cabinet, in its meeting on July 25, 2013 decided that only in the case of the latter’s decisions, within the scope of its charter, shall not be subject to ratification by the Cabinet.

Decisions taken by the Cabinet Committee on Privatization (CCOP) since 10 August, 2015 to 02 October, 2015 are as follows: (i) Privatization of National Power Construction Corporation (Private) Limited (NPCC)- approval of reference price- The Cabinet Committee on Privatisation considered the Summary dated 10th August 2015, submitted by the Privatization Division regarding “Privatization of

National Power Construction Corporation (Private) Limited (NPCC) approval of Reference Price” and decided to fix the Reference Price @ Rs.1,119.00 per share with total valuation amount of Rs 1,969.00 million for 88% shares of the National Power Construction Corporation (Private) Limited.

II – Approval of the highest bid received in the bidding process for the privatization of National Power Construction Corporation (NPCC) – Cabinet Committee on Privatisation considered the Summary dated 11th August 2015, submitted by the Privatization Division regarding” Approval of the highest Bid received in the bidding process for the Privatization of National Power Construction Corporation (NPCC)” and approved the proposal contained in Para-9 of the summary. The PC Board in its meeting held on 11-08-2015 has accepted and approved the highest bid received from M/s Mansour Al Mosaid Company of the Kingdom of Saudi Arabia, as detailed in Para-8 ante, and recommended the same for the consideration and approval of the CCOP.

III- Approval of transaction structure for the privatization of Faisalabad Electric Supply Company Limited (FESCO)- The Cabinet Committee on Privatization considered the Summary dated 14th September 2015, submitted by the Privatization Division regarding “Approval of Transaction Structure for the Privatization of Faisalabad Electric Supply Company Limited (FESCO)” and decided as follows: (i)approved sale of 74% GOP shares in FESCO along with transfer of management control to the strategic private sector partner, and (ii) regarding proposal contained in para-8(ii) of the Summary, the CCOP constituted a committee comprising Mr. Muhammad Zubair Chairman, Privatization Commission (Convenor). Noor Ahmad, Additional Secretary, Finance Division, Zargham Ishaq, Joint Secretary, Water & Power Division, Tahir Mahmood, Commissioner SECP and Dr. Khaqan Hassan Najeeb, Director General (ERU), Finance Division to deliberate upon the land issue of FESCO and submit a report to the CCOP in its next meeting.

IV- Restructuring and privatization of TPS Muzaffargarh of the Northern Power Generation Company Limited (NPGCL) carve out option – Cabinet Committee on Privatization considered the Summary dated 14th September 2015, submitted by the Privatization Division regarding “Restructuring and Privatization of TPS Muzaffargarh of the Northern Power Generation Company Limited (NPGCL)- Carve Out Option” and approved the proposal; and (ii) regarding proposal contained in para-8(ii) of the summary, the CCOP directed the Privatization Commission to carry out comprehensive feasibility study on privatization of power sector entities and submit the finding of the study to the CCOP. The carve-out of selected assets and liabilities of TPS Muzaffargarh from NPGCL into a newly incorporated company(TPS Muzaffargarh Limited), which shall be a fully owned subsidiary of NPGCL.

V- Approval of transaction structure for the privatization of Pakistan Steel Mills Corporation (PSMC).

The Cabinet Committee on Privatization considered the Summary dated 1st October 2015, submitted by the Privatization Division regarding “Approval of Transaction Structure for the Privatization of Pakistan Steel Mills Corporation (PSMC)” and decided that as the Government of Sindh had expressed interest in acquiring the Mills, they should be offered to acquire PSMC with all its assets and liabilities and directed the Privatization Division to formally approach the Government of Sindh in this regard and bring back the case to the CCOP on receipt of response from the Provincial Government.

VI – Approval of transaction structure for the privatization of Faisalabad Electric Supply Company Limited (FESCO) – Cabinet Committee on Privatization considered the Summary dated 2nd October 2015, submitted by the Privatization Division regarding “Approval of Transaction Structure for the Privatization of Faisalabad Electric Supply Company Limited (FESCO)” and approved the proposal of all core land assets to be transferred to FESCO under a long term lease agreement coinciding with the life of distribution license. The lease rental will be determined on fair market current value. Rent will be at a base yield of 6% and increased according to rental laws by 25% every three years. Due restrictions will be put on the use of the land which may only be used for the purposes of FESCO as a distribution of electricity entity.

Decisions taken by the Cabinet Committee on Privatization (CCOP) in its meetings held on 26th November, 9th & 12th December, 2014.

I – Proposed transaction structure for the divestment of GOP residual shares in Allied Bank Ltd (ABL) transaction- CCoP approved the proposal. The PC Board in its meeting held on November 26, 2014 reviewed the Transaction Structure proposed by the LM & BR. After thorough deliberations, and keeping in view the (a) investor dynamics, (b) seamless execution, (c) maximization of international and domestic investor participation, and (d) extracting the best value for the GOP Shares, the PC Board approved and recommended the Transaction Structure proposed by the LM & BR, The recommended Transaction Structure envisages offering the entire GOP Shares to both International & Domestic institutional investors and High Net Worth Individuals (HNWI), through the Karachi Stock Exchange (KSE) Book- building system. The offering of GOP shares will be via an Offer for Sale Documents (OFSD) in compliance with the applicable regulations of the domestic Stock Exchange(s) and the Securities and Exchange Commission of Pakistan (SECP).

Key Features of the Recommended Transaction Structure are as follows: (i) strike Price to the determined via the Dutch Auction Method, in accordance with the KSE Book-building system; (ii) institutional investors will be required to pay at least 25% margin money with the bid, whereas Individual Investors will be required to deposit 100% bid money; (iii) floor price, as approved by the CCoP and the PC Board, will be notified prior to the Book-build exercise, planned for December 11-12, 2014; (iv) key exemptions, pertaining to the Transaction Structure, allotment mechanism, etc. will be solicited from the Securities & Exchange Commission of Pakistan (SECP), State Bank of Pakistan (SBP), Central Depository Company of Pakistan (CDC), Karachi Stock Exchange (KSE) and other domestic Stock Exchanges for successful completion of the Transaction; and (v) exemption will be solicited to reduce the Minimum Bid Size by the individual investors to PKR 500,000/- from PKR 1,000,000/- as defined in the KSE Regulations.

II -Divestment of GOP residual shares in Allied Bank Ltd (ABL) transaction- Cabinet Committee on Privatization (CCOP) considered the Summary dated 9th December, 2014, submitted by Privatization Division on “Divestment of GOP Residual Shares in Allied Bank Ltd (ABL) Transaction” and unanimously approved the final Floor Price of Rs. 105 per share for offer of GoP shares in ABL as recommended by the PC Board.

III- Divestment of government of Pakistan (GOP) residual shares in Allied Bank Ltd (ABL) – approval of strike price and allocation of shares- Cabinet Committee on Privatization (CCOP) considered the Summary dated 12th December, 2014, submitted by Privatization Division on “Divestment of Government of Pakistan (GOP) Residual Shares in Allied Bank Ltd (ABL) —Approval of Strike Price and Allocation of Shares” and approved the Strike Price of Rs.110 per share for offer of GoP shares in ABL and its allocation to the successful bidders specified in the Offer for Sale Document (OFSD) as recommended by the PC Board.