Cabinet Approves Asset Sale Order

ISLAMABAD:

In a desperate attempt to save the country from default through the emergency sale of state assets to foreign countries, the federal cabinet approved an order to circumvent all process procedures and also abolished regulatory controls, including the applicability of six relevant laws.

Through the Intergovernmental Business Transactions Order 2022, the Center also empowered itself to issue binding instructions to provincial governments for land acquisition, according to a copy of the order.

President Arif Alvi has yet to sign the order.

The government also barred the country’s courts from receiving any petitions against the sale of assets and shares of state-owned companies to foreign countries, according to the order.

The federal cabinet had on Thursday approved the order to sell stakes in government-owned oil and gas companies and power plants in the United Arab Emirates to raise $2 billion to $2.5 billion to avert the impending default.

The UAE in May refused to provide cash deposits due to Islamabad’s inability to repay previous loans and instead asked to open its businesses to investment.

Finance Minister Miftah Ismail said this week that it usually takes 471 days to complete a privatization transaction. He added that the government needed to strike deals with foreign countries within days to raise funds urgently.

The International Monetary Fund (IMF) has set a condition that Pakistan’s case cannot be taken to the board until it secures $4 billion from friendly countries to fill the financing gap .

The Federal Minister of Justice had not provided the reason for the subject of this article.

The Pakistani rupee lost 8.3% of its value this week – the strongest since November 1998, indicating the severity of the challenges facing the government.

However, the order raised numerous transparency concerns, including the pricing of the shares of Mari Gas Company, Oil Gas Development Company Limited and Pakistan Petroleum Limited amid their low market price relative to their book values. .

The order provides a mechanism to conduct a business transaction under an intergovernmental framework agreement to promote, attract and encourage foreign states to engage in economic and trade relations with Pakistan, according to the documents.

The Cabinet Committee on Intergovernmental Business Transactions will be formed and given sweeping powers, including those that overturn six Acts of Parliament. The order makes the federal cabinet so powerful that it can even issue binding instructions to the provinces to hand over any land and enter into a transaction with a foreign state.

Decisions of the cabinet committee cannot be challenged in court nor can any investigative agency open such deals, according to the order.

“Intergovernmental Framework Agreement” or “G2G Agreement” means an agreement or memorandum of understanding between the Federal Government and the foreign state government(s).

The scope of the ordinance will be extended to all “commercial transactions”, including sale, purchase, investment, divestment, supply, licensing, rental, joint ventures , assignments, concessions, service contracts, management contracts or other transactions arising from a G2G or commercial agreement, according to the documents.

The trade pact under the G2G agreement is to be negotiated and executed between designated federal government entities and the foreign state government.

The Cabinet Committee on Intergovernmental Business Transactions will authorize negotiations of a G2G agreement between the federal government and the government of a foreign state.

It will form negotiating committee(s) for G2G or trade agreements and approve price discovery mechanisms.

However, sources said the price discovery mechanism could become controversial in the absence of transparency and low stock market values ​​due to a fall in the Pakistan Stock Exchange.

The cabinet committee will also recommend approval of G2Gs or trade agreements finalized by the negotiating body.

It will recommend exemptions, exclusions or concessions to regulatory compliance and authorize expedited procurement of transaction advisory or consulting services; and make the decisions necessary for the prompt execution of business transactions, in accordance with the order.

The cabinet committee shall have the power to adopt such directives as may be necessary to remove obstacles or difficulties.

It is important to note that the federal government may issue “appropriate instructions” to the provincial government, local government, or relevant agency or authority to implement the purpose of the intergovernmental business transaction, including the land acquisition, rehabilitation and resettlement, provision of public services, construction of road approaches to major highways and all other similar activities.

The sources said that the powers have been obtained to sell the land of the two LNG power plants to the foreign country along with their machinery.

The federal government may exempt any intergovernmental business transaction from the regulatory requirement or operation imposed by any law now in effect for the purposes of this order.

This sweeping clause was introduced to shorten the sale of state shares by overriding the Companies Act, the Securities and Exchange Commission Act, the Privatization Ordinance and other relevant laws.

According to the order, no court in the country can entertain any claim, petition or suit against any process or deed of sale of assets to the foreign entity. However, legal experts say the courts do not accept such exclusion clauses.

The order states that no court will grant an injunction or consider an application for an injunction against any process undertaken, intended or purported to be undertaken for any business transaction or agreement.

No lawsuit, suit or other legal proceeding or action for damages may be claimed against the persons who will be involved in the sale of these assets.

The indemnity was extended to “everything done”, including breaches of process or omission in the exercise or performance of any function, power or duty conferred or imposed by or under the ordinance or any enforced legislation, unless the act or omission is shown beyond reasonable doubt to have been in bad faith.

Similarly, no investigative agency, anti-corruption agency, law enforcement agency, or court may initiate an investigation or initiate an investigation into any breach or procedural irregularity by any person in any business transaction or agreement. under the order, unless there is proof of personal money. gain with corroborating proof of the link between this monetary gain and the unfair advantage rendered to any party to the agreement.

No one will be prosecuted in a personal capacity for acts performed in their official capacity.

The government has also set aside six laws to undertake these business transactions to sell stakes to foreign powers.

These are the Companies Act 2017, the Privatization Commission Ordinance 2000, the Public Procurement Regulatory Authority Ordinance 2002, the Public-Private Partnership, Securities and Exchange Commission of Pakistan Act 1997, Securities Act 2015 or any other law for the time being in force or in any instrument having effect thereunder. a law other than the ordinance.