Privatisation for the people is a giant step for industry

Pakistan's plan to sell between 10 to 15 per cent stock of its giant Oil and Gas Development Company [OGDC] through global depository receipts and a domestic offering, marks an important step forward for expediting gas development.

For equity investors with an interest in Pakistan, OGDC represents a major opportunity. It's a company which has brought windfall gains following a previous such offer when Pakistanis got to invest in shares of a thousand batch for each investor. OGDC is Pakistan's largest listed company with a capitalisation of about $8.3billion on the Karachi stock market.

Depending on the number of shares on offer, the upcoming stake ranging from 10 to 15 per cent stock represents anywhere between 430million to 645million shares. Pakistani investors welcomed the decision when the price of OGDC's shares already listed on the market rose over one per cent the first time that the stock market responded to the announcement. OGDC's shares are bound to attract a large number of prospective investors, mainly because of the company's own track record at a time when Pakistani leaders are keen to give an impetus to gas exploration in the country. OGDC's activities are centered around the business of exploring oil and gas an activity that remains crucial to support Pakistan's recovering economy. The OGDC's share offer highlights some vital factors: First, Pakistan's push to privatise its companies such as the ongoing resolution to completing the privatisation of Pak Telecom which was bought by Etisalat.

Dubbed as 'privatisation for the people', the share offer has helped to blunt some of the possible public criticism of privatisation plans.

In fact, previous investors in shares of companies such as OGDC or Pakistan Petroleum. PPL, the largest gas company, has reaped windfall gains on account of a sharp escalation of share prices in the subsequent months. Over time, Pakistan has seen a sizeable portion of its public come out in favour its privatisation programme as many have been the beneficiaries of sharp gains on individual share offers. Second, Pakistan's increasing energy needs make it essential for the country to see a fast track rise in the sources of investment for new energy projects.

Enhances

The OGDC's further entry to equity markets by way of its new GDR and share offer only enhances the prospect for other companies in a similar line of business to follow suit. Once international individual investors have the opportunity to successfully test their appetite for one Pakistani company in the oil and gas business, they are likely to remind themselves of venturing to invest similarly in other businesses from the same line of work. In the coming years as Pakistan's energy needs grow by leaps and bounds, there's every chance that the demand for new businesses venturing in to the oil and gas sector would rise further.

- The writer is a Pakistan-based journalist.