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Baloch unrest holds Pakistan’s privatisation plans hostage

KARACHI: A deteriorating security situation in Pakistan’s mineral-rich province of Balochistan could hamper upcoming privatisation sales involving energy companies, analysts said after a fresh bout of violence flared in the region.

The government plans to sell 51 percent stakes in Pakistan Petroleum Ltd (PPL), Sui Northern Gas Pipelines Ltd. (SNGPL) and Sui Southern Gas Co. Ltd. (SSGC)

“All the three companies have significant exposure in the province, and I don’t think any investor will come till the time the situation is settled,” said Aqib Elahi, director of research at AKD Securities.

On Sunday, 13 people died when a bomb exploded on a bus 60 km outside Quetta, while another eight were killed during a third day of heavy rocket attacks close to gas fields in the southeast of the province.

On Tuesday, tribal militants blew up a gas pipeline supplying the US- and British-owned Uch power plant, according to a senior civil administrator for the Dera Murad Jamali region of Balochistan. It was the fourth attack on the pipeline in a month.

Baloch secessionists and tribal militants have waged a low-level insurgency for decades, but the violence has again escalated over the past year, posing another challenge to President Pervez Musharraf’s authority over his turbulent nation, particularly in the Baloch and Pashtun tribal areas.

Balochistan Governor Ovais Ahmed Ghani this week accused Afghan warlords and drug barons of arming tribal militants and India of financing them. New Delhi has denied any involvement.

The army launched a crackdown after a December 14 rocket attack while President Pervez Musharraf was visiting the town of Kohlu, and Baloch nationalists said over 200 people have been killed since, though analysts say the numbers could well be exaggerated.

Elahi foresaw delays in the whole privatisation process, and said the government may shift its focus to a more marketable company like Pakistan State Oil, which has no Baloch exposure, and Pakistan Steel Mills.

PPL, which operates Pakistan’s largest gas field at Sui, managed to attract 11 local and foreign investors in May, out of which four were short-listed in August for bidding.

However, the government has not come up with a bidding date yet, though it has previously said that the sell-off process would be completed in the fiscal year ending June 30.

A bomb blast outside a building housing PPL’s headquarters in Karachi killed three people in November. The Baloch Liberation Army claimed responsibility for the attack.

“There has not been much of a progress on PPL over the past few months,” said a senior analyst, who asked not to be named.

“This itself is indicative that the government realises the trouble with the transactions involving Balochistan.”

Mohammed Sohail, director f research at Jahangir Siddiqui Capital Markets, said that the situation in Balochistan was affecting the sell-off plans of PPL.

“It is very difficult to conduct site visits etcetra in such a situation, so the process is definitely being affected,” he said. For SNGPL and SSGC, the government has already extended the deadline for submission of expressions of interest and completion of paperwork to March 11. Previously, the deadlines were February 11 and March 4 for SNGPL and SSGC respectively. No bidding dates have been announced.

Balochistan is a sparsely populated tribal region, which makes up close to 43 percent of Pakistan’s land area. Little oil has been found, but it has a lot of gas, as well as coal.

It also has rich deposits of copper, gold, silver, platinum, aluminium, and uranium. Rebels and renegade tribesmen who would like to benefit more from the resources in their territory frequently target gas production and power plants and pipelines, along with other infrastructure facilities and transportation links. reuters

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