Pakistan restarts energy sell-off

Karachi's stock exchange was boosted by the auction

Pakistan's privatisation plans, stalled since shortly before the attack on Afghanistan in 2001, has restarted with state oil and gas rights going under the hammer.

A string of bidders, both foreign and domestic, have offered a total of $176m (£122m) for nine concessions.

The figure, said privatisation minister Altaf Saleem, "is extremely close to what we had estimated".

Bids in

Badin I (40%):
BP, Occidental
$131.5m

Pariwali (17.5%):
Fauji Foundation
$18.7m

Adhi (11%):
Pakistan Oil Field
$11.33m

Badin II (25%):
BP, Occidental
$8.5m

Dhurnal (25%):
Western Acquisitions
$3.83m

Turkwal (20%):
Attock Oil Co
$1.6m

Ratana (25%):
Western Acquisitions
$532,500

Minwal (17.5%):
Pyramid
$201,000

Mazarani (12.5%):
Western Acquisitions
$107,500

The receipts from the privatisation programme are intended to help reduce Pakistan's external borrowings - although this particular set of deals will hardly scratch the surface of the $38bn debt burden.

Among the main top bidders are BP, Canadian firm Occidental Petroleum, and the Fauji Foundation, the wealthy Pakistani army welfare organisation.

More to come?

Observers felt the government could have got more.

"The price is a bit below our expectations," Arshad Arif, head of research at AKD Securities, said, quoting a forecast of about $200m.

"The government should push the highest bidders and it may still get a price higher."

Ahead of the auction, some had suggested the government had hoped for as much as $350m.

One reason for the low price could be the fact that despite reforms to the sector, regulation of the energy business in Pakistan is still far from transparent.

Front line

The political risk associated with a country bordering Afghanistan could also play a part in reducing the preparedness to pay up.

And popular opposition to the privatisation programme is high.

Still on the privatisation agenda is the sale of a 26% shareholding in state telephone firm Pakistan Telecommunications.