Pakistan government has decided to divest its remaining shares in Kot Addu Power Company Ltd, (KAPCO) as part of a broader privatization program initiated three years ago.
The government of Prime Minister Nawaz Sharif had promised to pursue an ambitious privatization program to sell off loss-making entities in return for a financial package from the International Monetary Fund in 2013 to stave off a balance of payment of crisis.
The government last year raised more than $1 billion by selling stakes in Habib Bank Limited, but is finding it difficult to get buyers for most of its 68 companies it has pledged to sell to private sector. A proposed sale of national flag-carrier PIA has been delayed due to labor protests. Loss-making companies are costing the government’s exchequer $5 billion a year.
However, delay in privatization program has not impacted release of loans from the IMF in the backdrop of reforms that has put the country’s economy back on the growth path
A meeting of the Privatization Commission held in Islamabad on July 14 approved to divest remaining 40.25 percent or 354,311,133 shares in KAPCO as a strategic sale to the qualified bidder.
KAPCO Power plant was built between 1984 and 1996 by the state-run power utility WAPDA. The same year, the government sold its 36 percent shares to a strategic buyer after an international competitive bidding. In 2013, the strategic investors sold its entire shareholding in the company to local corporate entities and individuals. The government sold another 18 percent of its shares to the general public in 2005.
The company was formally listed on Karachi Stock Exchange.