Strapped for cash, Pakistan’s government is pulling together all its resources to increase its dollar reserves and improve its current account. Between April and December 2014, it plans to raise up to $6bn from global markets through a host of transactions.   

Roadshows for Pakistan’s first Eurobond auction in seven years, which took place the first week of April, were stunningly successful, raising $2bn against an expectation of only $500m. 


A few blocks away from the finance ministry, the Pakistan Telecommunication Authority (PTA) is preparing to raise up to $1.6bn from a spectrum auction due on April 23. PTA says it plans to sell a cellular licence of 850-megahertz (MHz) band at a base price of $291m. It also plans to auction 30MHz under third-generation (3G) technology at a starting price of $29.5m per MHz. Those that win the 3G auction can also bid for 20MHz under 4G licences with the base price of $21m per unit.

The PTA is tight-lipped about progress. However, sources at Pakistan’s Board of Investment say they have been receiving inquiries from European and Malaysian telecommunications operators. Saudi Telecom Company and Turkey’s Turkcell have also shown active interest in the auction.

Privatisation controversy

In addition to these transactions is a controversial privatisation process. The government has approved 32 entities for privatisation. Faced with political resistance, however, the Privatisation Commission has decided to pluck the low-hanging fruit as a first step.  

By September 2014, the government plans to divest about 10% to 20% of shares in Habib Bank, UBL, Allied Bank, the Oil and Gas Development Company (OGDC) and Pakistan Petroleum. 

The appointment of financial advisors for OGDC, Pakistan Petroleum and UBL will be completed by the first week of May, following which it will take eight to 10 weeks to complete the transaction, according to the commission’s chairman, Muhammad Zubair.   

“We plan to do a GDR [global depository receipt] for OGDC and [Habib Bank]; the others are going to be local market transactions. We are aiming to raise $1bn from OGDC’s GDR and about $900m from that of [Habib Bank],” says Mr Zubair.

Sovereign sukuk

Meanwhile, Zubair Haider Shaikh, head of corporate and investment banking at Dubai Islamic Bank (DIB) Pakistan, is piecing together a sovereign sukuk with the help of counterparts at DIB Dubai. Earlier this year, chief executive Adnan Chilwan offered Pakistan help in floating the sukuk.

“We are currently working on the structure, which is going to be finalised by the end of April. Once the structure gets cleared by the [finance] ministry, then we will take a decision about other details,” says Mr Shaikh, adding that the paper will likely be floated at the Dubai bourse by December 2014.

Mr Shaikh says the bank plans to help raise $500m from the transaction. “But we are also exploring the option to tap the market a few times with a size of $200m to $250m each and raise a total of $1bn instead,” he says, explaining the need for the government of Pakistan to keep its presence in foreign debt markets. To that end, the Eurobond issue will prove to be the litmus test.

This article was edited on 15 April 2014. The article published in fDi Magazine said that Pakistan’s first Eurobond auction was targeting $500m. The auction has since taken place, and the article has been edited online to reflect this.