Govt decides to wind up BESOS scheme

Aftab Ahmed

The PTI government has decided to wind up Benazir Employees Stock Option Scheme (BESOS) and transfers Rs 28 billion stuck in Employees Empowerment Trust (EETs) to Federal Consolidated Fund (FCF) account.

During the tenure of the Pakistan Peoples Party (PPP) on August 5, 2009, the cabinet had approved Benazir Employees Stock Option Scheme (BESOS) following the direction of President Asif Ali Zardari, offering 12 percent shares of the government of Pakistan to employees of 80 state-owned entities (SoEs) as an arrangement to empower the employees.

The scheme envisaged that 12 percent amount of the share held by the government of Pakistan received from dividends was to be divided into two portions.

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As many as 50 percent was to be credited to Central Revolving Fund (CRF) maintained y the Privatization Commission which was to be used for payments of buyback claims on the pre-defined criteria.

It was also decided that 50 percent would be kept by Employees Empowerment Trust (EETs) for distribution among the employees of respective entities.

In order to implement the scheme, EETs were created and got registered in 64 SoEs and unit certificates were distributed among 236,306 employees in 59 SoEs. However, in spirit, the scheme could become effective for over 23 SoEs only.

Cumulative claims as of June 30, 2017, were estimated to be over Rs 32 billion as worked out by the Privatization Commission giving an annual average payout of Rs 4 billion.

In addition to this, out of the total dividends received in the Central Revolving Fund, 94 percent was received from Oil and Gas Development Company Limited (OGDCL), Pakistan Petroleum Limited (PPL), and Kot Adu Power Company Limited (Kapco) only which is not sufficient to cater for its respective buyback claims. However, an amount of Rs 6.76 billion was available by June end 2016 in CRF out of which Rs 1.16 billion was used for buyback-related payments.

Officials told Newztodays.com that Privatization Commission placed a moratorium on the execution of the scheme on October 11, 2012. At the request of the finance division, the remaining amount of Rs 5.6 billion was remitted to the finance division on June 28, 2016. The Finance Division has also stated at that time that the amount may be returned to Federal Consolidated Fund (FCF) account and will be made available if the need arises.

Moratorium led to several court cases filed by the employees of the various SoEs in various courts. Now, substantial funding from the national exchequer was required to keep it afloat. If only buyback benefits to the claimants belonging to Kapco, OGDCL, and PPL are entertained, it will result in a massive financial outlay that may continue for a long time.

The government has decided that whereas deciding of a case by courts may take some time, an amount of Rs 28 billion is lying stuck in EETs including Rs 117.6 million with Privatization Commission may be returned to Federal Consolidated Fund account being the federal government’s share of dividends.

Secondly, no amount may be transferred to any bank account on account of BESOS and thirdly privatization commission may initiate the case for winding up of BESOS. The matter was referred to the federal cabinet because BESOS was created by the federal government. The cabinet has approved these proposals which also include the winding up of BESOS.