A decision by Pakistan’s supreme court reversing the privatisation of Pakistan’s largest steel plant has no direct consequences for past or future privatisations, a senior minister said on Wednesday.

During the financial year, which ended last month, the country privatised companies worth a record Rs197bn ($3.26bn), up from Rs43bn the year before.

But the privatisation of the Karachi-based steel mill was reversed last month by the supreme court, which was responding to a petition filed by an independent lawyer against the $362m deal, agreed in March.

The government sold 75 per cent of the company to a consortium consisting of Russia’s Magnitogorsk Iron & Steel Works, Saudi Arabia’s Al-Tuwairqigroup, and Pakistan’s Arif Habib group.

“Pakistan’s privatisation ordinance of 2000, which has provided the legal basis for all privatisations in the past six years, has not been affected by this verdict,” Zahid Hamid, Pakistan’s privatisation minister, told the Financial Times on Wednesday.

“The positive implication is that the supreme court’s judgment is specific to the steel mill and does not have wider consequences.”

Mr Hamid was seeking to calm fears that the ruling could derail the country’s privatisation programme, considered one of the more successful among developing countries.

He said Pakistan was determined to “proceed vigorously with its plans”, which included the privatisation this year of the two main gas companies, Sui Northern and Sui Southern; National Investment Trust, the largest mutual fund; Pakistan Petroleum, the largest gas exploration and supply company; and Pakistan State Oil, the main oil marketing company.

Critics have pointed to revelations that the government had agreed to pay the redundancy packages of workers – expected to total Rs15bn – who would be sacked by the steel plant’s new owners.

Opposition politicians have argued that the value of the 4,000 acres of real estate underlying the plant exceeds the government’s expected returns from the privatisation.

Built in the 1970s with Russian help, PSM, with an annual production capacity of 1.1m tonnes, has faced recurring losses for most of its life. In the past three to five years, a new government-run management said ithad boosted efficiency, with the plant now running at more than 95 per cent of capacity, up from 60-70 per cent in the 1990s.

Mr Hamid defended his ministry against allegations that it had not been transparent enough in disclosing details of the deal,but said: “In future, we need to be much more forthcoming so that all of our information is shared with the media and the public is fully in the picture.”

In spite of Mr Hamid’s assurances, some businessmen warned that the court’s decision could unnerve investors, who fear that the privatisation programme could become bogged down in litigation.

“We have to consider the possibility of the supreme court’s decision discouraging investors in future,” said the head of a Pakistani bank.

Analysts said the PSM case was a chance for the government to review the way it had managed the privatisations.

“This is a unique opportunity for the government to say it is willing to learn from this experience,” said Nasir Ali Shah Bukhari, who chairs the Karachi-based Khadim Ali Shah Bukhari group.

Economist Akbar Zaidi said the supreme court had not opposed privatisation: “It has only said that the issues surrounding privatisation should be addressed more deeply.”

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