Array
(
)
)
–> The Cabinet Committee on Privatisation (CCoP) on Thursday excluded banking sector from the purview of Benazir Employees Stock Option Scheme (BESOS) and de-listed entities, already privatised, from the scheme. The meeting was presided over by Finance Minister Abdul Hafeez Shaikh noted that objectives of the scheme were marginally achieved as only a small segment of employees of 3-4 entitles have benefited from the scheme, while majority of them did not gain anything which shows that in-depth analysis was not carried out before presenting the scheme for approval.
It was suggested that while placing a cap on payouts, there is also a need to cap the payment on annual dividend at a certain level. Besides, there was a need for complete structural overhaul of the scheme for avoiding pilferage of Government resources.
According to the minutes, the meeting was informed that the CCoP while reviewing progress of the scheme in its meeting on August 5, 2011 noted that the distribution of benefits under the scheme was highly disproportionate as employees of some entities such as PPL, OGDCL, Kapco and NIC, etc, were enjoying regular dividends as well as large amount of payouts ranging between Rs 5.1 million to Rs 7.6 million at the time of buyback of shares, while over 104,000 employees in 17 SOEs received no payout due to negative net worth of the entities concerned. In addition, financial viability of the scheme was another concern noted by the CCoP.
Therefore, a committee, headed by the Minister for Privatisation, was constituted for revisiting the scheme and formulating recommendations for consideration of the CCoP. The said committee reviewed the recommendations floated by the Privatisation Commission in consultation with Securities and Exchange Commission of Pakistan (SECP) and M/s MYASCO.
The CCoP was informed that in a meeting held under the chairmanship of the finance secretary on October 20, 2011, it was advised that the BESOS may be revisited and the possibility of cross subsidisation be explored so that all the expenses could be made from the Central Revolving Fund of the Scheme as resource constraints did not allow the GoP to provide regular funds for the Scheme. In light of the directions of Finance Division, the scheme was revisited and presented to the President of Pakistan on September 2, 2012 in a meeting which was attended by Ministers for Finance, Water and Power and Petroleum, etc. The CCoP was further informed that the Board of the Privatisation Commission, in its meeting held on 05 October 2012, also considered and examined the above proposals and agreed with them.
With regard to implementation of BESOS, the CCoP was informed that trusts in 64 entities have been registered to date and Rs 3 billion dividend has been distributed to 31,681 employees in 16 entities, Rs 1.16 billion has been disbursed to 223 employees in 3 SOEs on buy back claims.
It was also revealed that implementation of BESOS in commercial banks requires Rs 18 billion to buy 12 percent shares from State Bank of Pakistan. The GoP would be subsidising loss making entities already receiving annual budgetary support/subsidies/grants/bail-outs etc from the national exchequer.
The committee also discussed impediments to BESOS due to ownership structure/contractual obligations/joint venture partner consents in 16 SOEs.
After detailed discussion the committee took the following decisions: (i) BESOS be extended to employees joining after 14th August 2009; (ii) 75 percent of the annual dividend will be transferred to Central Revolving Fund; (iii) 25 percent of the annual dividend will be distributed amongst employees subject to the condition that annual share of an employee should not exceed his basic pay for 10 months;(iv) maximum payout per employee be capped at Rs 1.0 million and will include claims under process; (v) bonus shares and surrendered shares will be retained by the Employees Empowerment Trusts (EET);(vi) entities already privatised will be de-listed from BESOS; (vii) Saindak Metals Limited (SML), Hydrocarbon Development Institute of Pakistan, Pepco, Pakistan Engineering Company Limited, National Logistic Cell and Parco will be de-listed from BESOS; (viii) banking sector will be excluded from the purview of BESOS; and (ix) surplus funds after meeting buyback claims will be surrendered to finance division within 90 days of the end of a financial year.
Copyright Business Recorder, 2012