Karachi - Amid rising rumors of an imminent financial default, the government of Pakistan recently laid out an ambitious emergency plan to dispose of its multibillion-US-dollar energy assets to raise money. Among the first in line is the sale of rich Qadirpur gas field in southern Sindh province, just 260 miles north-east from the port city Karachi.
With whopping reserves of around 2.9 trillion cubic feet, the gas field is considered worth more than 3 billion dollars in international markets and is also regarded as a vital strategic asset.
On Friday, the state-owned Privatization Commission recommended different options on Qadirpur's privatization, prepared by financial adviser US-based Merrill Lynch, to the cabinet's committee on privatization for a final decision.
A source close to the deliberations said a decision would be taken by September 25th over when to open the bidding.
Among the likely suitors are Austrian OMV and some state-owned corporations from the Persian Gulf, such as Kuwait Petroleum Corporation (KPC), who may finalize their final bids by the end of this month.
Two other national jewels in top slots of planned privatization include the billion-dollar 880-megawatt Jamshoro Steam Power Plant, and strategic shares in Kot Addu power plant, operated by KAPCO, the country's largest independent power producer.
But the planned sales might trigger political tensions in the new ruling coalition, as the two key allies have taken divergent positions on the issue and both have warned the leading Pakistan Peoples Party (PPP) of grave consequences if the decision is taken against their will.
The Awami National Party (ANP) from the restive North West Frontier Province supports the sell-off deals but wants their member to parliament to be appointed as the oil minister before the agreements are signed.
On the other hand, Mutteheda Qaumi Movement (MQM), a major partner in both provincial Sindh and federal capital Islamabad, has threatened to mobilize a mass movement against the planned sales of the oil and gas fields.
Both the parties played a critical role last week in propelling Asif Ali Zardari, widower of slain Benazir Bhutto, into the powerful post of president of Pakistan.
"We have done all for the PPP now we have nothing to offer, now it is its turn (to reciprocate)," MQM's exiled leader Altaf Hussain recently told supporters from London early this week.
Thousands of MQM supporters are employed in the PSM and Jamshoro Power Plant and the jobs of many of them will be at risk when the new administration introduces reforms to improve the operations at the facilities.
But time is running out for Pakistan's panicked economic managers.
The country is facing a mounting oil import bill, struggling under a record 21 billion dollar budget deficit and depleting foreign exchange reserves which are barely enough to meet two months of imports.
All-time high inflation of around 25 per cent and troubling unemployment of over 6.6 per cent by 2009, is pushing the country to desperately seek quick fixes before the economy reaches an out of control stage.
Already the main Karachi stock exchange has been at a virtual standstill for the past month as management froze prices to avoid further losses after the market shed 48 per cent in the last six month on political turmoil and the rising Islamic insurgency.
The rupee has also depreciated by around 18 per cent against the dollar since January.
Topping all this, international markets are buzzing with rumors that the country could face default as early as 2009 on its external loans of several billion dollars in the form of bonds and other sovereign loans.
Though Pakistan is currently contemplating to undergo a tough IMF stabilization programme and to secure urgent assistance from the World Bank and Asian Development Bank, the values of Pakistani bonds in London already plummeted to junk category.
The international credit rating agencies like Moody's Investors Services and Standard & Poors consider investment in Pakistani assets as the riskiest in the world as the insurance premiums for Pakistan's debt have skyrocketed to the costly level of 950,000 dollar for each 10 million dollar loan.
"In this scenario selling energy assets and expediting privatization effort is one sure ticket to wriggle out from the current financial morass," said Saad bin Ahmed, head of research at Capital One Equities.
