Government all set to convert State Life into a company via ordinance
State Life's conversion from a corporation into a company is a prior condition of the World Bank
Dunya News Report (Jibran Dost)
In its process to convert State Life Insurance Corporation (SLIC) into a company, the government is focused to promulgate a presidential ordinance instead of tabling a bill in the parliament.
Two months after the opposition dominated upper house of parliament rejected the Pakistan International Airlines (PIA) Corporation Conversion Ordinance; the government is all set to proceed with the conversion of State Life Insurance Corporation (SLIC).
“State Life’s conversion from a corporation into a company is a prior condition of the World Bank,” a top finance ministry official told the media.
At the same time, spokesperson for the World Bank stated “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.”
In order to increase growth and competitiveness in the country, the World Bank (WB) is considering expanding the Development Policy Credit (DPC-III).
With regard to the $500 million loan that the government has acquired, the legal status of the SLIC has to be changed, the finance ministry official further added.
Under the IMF programme, the government is also committed to list SLIC on the Pakistan Stock Exchange and make an initial public offer (IPO) of up to 15% of the SLIC’s stakes by June this year.
As of 2014, SLIC had Rs 496.7 billion in assets and its income from investment and premium stood at Rs 57.5 billion.
Finance ministry officials reveal that Finance Minister Ishaq Dar has already taken Prime Minister Nawaz Sharif into confidence over the move. In a meeting with the World Bank Country Director for Pakistan Parchamuthu Illangovan, Ishaq Dar expressed the progress that has been made in meeting the conditions of the loan.
However, the government’s decision to promulgate an ordinance is expected to 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 Mandviwala.
In contrast, Commerce Minister Khurram Dastgir expressed “Ultimately it has to be a bill. State Life has a unique business model, which will be protected during the corporatisation process.”
On the other side, in the consequence of not being able to meet International Monetary Fund’s (IMF) agreement on Pakistan International Airlines (PIA) privatisation, the government had to move the bill after the upper house vote.
In August 2015, the government promised the International Monetary Fund (IMF) that it will sell Pakistan International Airlines (PIA) by June 2016. Under the IMF program, the government is bound to sell at least 26 per cent shares of PIA to a strategic investor.
According to the IMF program document, the government had to complete the transaction by December 2015, however due to some misunderstanding on IMF’s part; government claims it would be able to complete the transaction by June 2016.
