ISLAMABAD: A loan of $20 million approved by the Asian Development Bank (ADB) to Pakistan has been cancelled which aimed at reinforcing the government’s ability to privatise and restructure its public-sector enterprises (PSEs) on the request of the government.
On Wednesday, the Manila-based lender announced the privatisation programme was presently static and had slowed down, hence the funds from the loan were no longer required by the government, reported Dawn.
The ADB had approved this loan for financing the government’s privatisation initiatives and it had restarted PSE divestment programme in 2013 and commenced several privatisations related transactions including a petroleum company, banks and sale of a construction company.
The government’s success remained limited and it required to update its strategy for some of the bigger transactions due to market conditions.
This included headway in talks with labour unions and financial conditions of PSEs.
This contributed to revised timeline and mode of transactions for bigger transactions like Pakistan Steel Mills (PSM), Pakistan International Airlines and power distribution companies.
It emanated in the reduction in the extent of privatisation actions for the government.
Additionally, after the approval of the loan by ADB in 2015, large grants from other development partners became accessible.
And the use of grant funds was made a priority by the government for privatisation actions like advisory services.
The project aims were to reinforce the government’s ability in privatizing and restructuring the nominated PSEs by bolstering the privatisation programme.
It also aimed at enhancing corporate governance, management and structure, improving governance and regulatory regimes in selected sectors presently dominated by PSEs.
Also, ADB through this loan facility intended to provide project management assistance which included planning, project implementation, financial management and procurement.
As per this extent and output, the project influence was aimed at decreasing fiscal and economic costs linked with PSEs.
The consequence was successful restructuring and privatisation of some PSEs, whilst the project was expected to be concluded in December 2019, with a loan closing date of June 2020.
A part of this loan facility provided by ADB was allotted for energy sector reform monitoring.
The examination was carried out by the government on its own via the ministries of finance, water and power, petroleum and natural resources.
Before the cancellation request, the authorities had prepared energy sector monitoring reports to recap the reform actions and headway up to May 2017.
Since funds from this facility weren’t needed, the government asked for the cancellation of the entire loan amount in July 2017.