The planned move will come just two months after the opposition dominated upper house of parliament rejected the Pakistan International Airlines (PIA) Corporation Conversion Ordinance in a rare move by using constitutional powers.
For the sake of a $500 million loan it is desperately trying to secure before June this year, the government has to change the legal status of SLIC, a top finance ministry official said earlier yesterday.
The World Bank (WB) is extending Development Policy Credit (DPC-III) to Pakistan to enhance growth and competitiveness.
”State Life’s conversion from a corporation into a company is a prior condition of the World Bank,” the official said. The insurance giant had Rs496.7 billion in assets as of 2014. Its income from investment and premium stood at Rs57.5 billion in that year.
According to finance ministry officials, Finance Minister Ishaq Dar has already taken Prime Minister Nawaz Sharif into confidence over the move. Dar met WB Country Director for Pakistan. Patchamuthu Illangovan earlier yesterday and informed him of progress in meeting the conditions of the loan, they said.
The finance ministry is eying the $500 million to meet Net International Reserves (NIR) requirements, putting a question mark over the ‘highest-ever’ reserves of $15.506 billion held by the State Bank of Pakistan (SBP).
However, the government’s decision to promulgate an ordinance rather than moving a bill in parliament may create difficulties for it in the Senate again.
“The Pakistan Peoples Party (PPP) may again consider bringing a resolution in the Senate, if the government decides to promulgate an ordinance,” said PPP Senator Saleem Mandviwalla.
Due to the Senate’s move to repeal the PIA Conversion Ordinance, the government could not meet the International Monetary Fund’s (IMF) condition on PIA privatisation and had to move the bill after the upper house vote.
“Ultimately it has to be a bill,’ said Commerce Minister Khurram Dastgir . He said his ministry favours corporatisation of SLIC as it will benefit all the stakeholders.
“State Life has a unique business model, which will be protected during the corporatisation process,” Dastgir said. He added that the SLIC act has to be amended to change the legal status of the corporation.
World Bank’s views
“Good progress is being made on different prior actions and the timeline for loan approval depends on the pace at which the country makes decisions on these prior actions,” an Islamabad-based spokesperson of WB said on Thursday.
He said the government had requested WB support to finance key reforms in boosting growth and competitiveness through DPC-III.
SLIC divestment
Under a separate IMF condition, the government is also committed to listing SLIC on the Pakistan Stock Exchange and making an initial public offer (IPO) of up to 15% of the insurance giant’s stakes by June this year. However, there are delays in meeting this condition as well.
On January 19, the Privatisation Commission (PC) board had approved appointment of lead managers and financial advisers for handling the SLIC IPO. The government has not yet signed the Financial Advisory Services Agreement (FASA) with the successful consortium of Habib Bank Limited, Bank Alfalah Limited, Arif Habib Limted and Elixir Securities Pakistan Private Limited due to confusion over continuation of privatisation policy.
The consortium would charge a minimum of Rs20 million as financial advisory services cost and PC wants clarity from the government before entering into legally binding agreement, sources said.
 into a company, the government is once again set to promulgate a presidential ordinance){kind=link}