The Privatisaton Commission has drafted rules on leasing out state mills and firms --a first step to hand over the operations of government-owned entities to the private sector.

The leasing-out of state enterprises will encourage small and medium entrepreneurs and ultimately contribute to industrial development.

"Privatisation laws allow for leasing out an entity or part of its assets, and the draft rules were framed in line with that," PC Chairman Mirza Abdul Jalil said in a press briefing yesterday.

The commission's rationale for leasing out is that the factories would continue with their operations, without shutdown.

The rules allow for leasing out state enterprises on a short-, medium- and long-term basis, for a minimum of 10 years and a maximum of 35 years, with provisions for extension.

The lessee will have to continue manufacturing the same products as before, while bearing the operational expenses of the mill.

In case of damage to the machinery due to events other than natural disas-

ters, the costs will have to be borne by the lessee.

The draft rules, however, do not allow the lessee to transfer liability or the operations of the mill to a third party.

Jalil said the government had previously handed over nine mills to factory workers to run and eventually gain ownership by clearing liabilities and dues to the government, but they failed to honour their commitments.

"Since they did not own these mills, they were unable to get loans from banks. As a result, they transferred these factories to third parties," said Jalil, who also favours regaining those privatised mills.

Of the 75 state enterprises privatised to date, 44 are profitable, 15 remain closed and another 16 are preparing to start operation.

Jalil blamed the failed ventures on a lack of government support to the parties who took over those mills.

"We were supposed stand beside them," he said, adding that the commission was working with the entrepreneurs to reopen these privatised factories.

Jalil revealed a list of nine assetvaluation firms who would be assessing the value of the state enterprises and their assets for privatisation.