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Not the Government’s Job

November 15, 2013 at 2:37 pm | News Desk

Muhammad Yousaf

Pakistan’s first experience with handing over of state owned enterprises to private sector in the 1980s. Though almost every government in power since Gen Zia has unanimously adhered to this formula but the Sharifs have proved themselves to be really fond of this technique. Every time they come to power there is a renewed call for deregulation of important state owned corporations that have by and now become a burden on the economy.

In his first term as country’s premier, he let away 26 percent shares and complete management of several banks and industrial units to private investors as country’s first major privatization plan in spite of fierce opposition and charges of corruption by the workers. The process followed in his second tenure though more through the privatization commission of Pakistan which was established in 1996. With just months in his third term as premier, the Nawaz Sharif-led government has announced privatization of 31 important state owned enterprises including Pakistan International Airlines, Railways, Steel Mills, Pakistan State Oil and many other national corporations in the first phase of his grand plan to get rid of 65 PSEs as advised by the IMF.  11918

Given the economic condition of the country and fast depleting national exchequer the announcement must be taken as a welcome move. The ever growing expenditures incurred by the state run organizations have led to a global consensus regarding the process. In Pakistan only, the annual loss generated by public sector enterprises is estimated to be around Rs400-500 billion. But in a troubled country like ours, even a simple and much needed process like this is never without complications. With the historic Supreme Court revoking of the Steel Mills sale in 2005, the privatization commission has a tough job at hand. The Sharif-led government will have to walk a tight rope for satisfying both an ultra-active judiciary and the watchful media apart from answering tricky questions by the Opposition parties.

The judiciary in particular and the Supreme Court in general pose a massive challenge to the massive plan in case the element of transparency is compromised. scThe court has done so in the past and will not shy away from repeating it if the rules are not effectively followed. The court’s judgements in the IPPs and Reko Diq mines case prove that the judges in the highest post will not sit quiet in case of any mishandling by the political government or the commission, come what may.

Apart from judiciary an ever watchful media will test the nerves of the government in case of any discrepancy in the selling of the PSEs. The vibrant media has effectively and positively influenced the governments in the past by active reporting and timely feedbacks. As visible in the many cases in the past, it would be foolish to expect media to turn a blind eye towards the government acts.

Though there is almost unanimity across the country’s political divide and not a single party is expected to vigorously oppose the idea, there are still ripe opportunities for them to put the ruling coalition to wire. With a strong Imran Khan led opposition the PML-N has little room for error. Also PPP, the former rulers of country have criticised the government’s announcement citing hikes in both unemployment and inflation as the only definite outcome of the plan. Meanwhile other parties like MQM and ANP may join hands as assets like Railways, Steel Mills and National Airlines comes under the radar. This political pressure coupled with the fierce opposition by the employees’ unions within the organizations will mount the pressure and may also attract public sympathies. Workers of these organizations will surely be on the streets for their survivals.

The process of privatization itself does not ensure a turnaround for the organization and things have, in the past, turned for the worse. According to a 1998 report by Asian Development Bank about performance of Pakistan’s privatized enterprises, one third of them had shown a negative trend after five years of deregulation.

Similarly with some events in the past like the sale of corporations such as Pakistan Telecommunication Company Limited and the Karachi Electric Supply Company (KESC) – the general perception is not a particularly rosy one, with widespread concerns about extensive labour lay-offs and continued injection of public-sector resources into the privatised entities. The case of the later is a special one. Not only the corporation is still being mishandled, it has refused to overcome its annual losses and has been constantly draining the national exchequer. However, a deep analysis will only find out that the problem was not with the plan but with what happened after its deregulation.

Apart from other stake holders, the general public also has some reservations about the mechanism as it is almost certain that job cuts and lay-offs will follow the process. Unlike the state, the private owners/managers find it impossible to keep large and mostly overstaffed work departments.  There is a strong need that a mechanism is devised with the corporation of government and the future buyers to ensure rights of the workers.

With so much to take care of, the Nawaz led-government is left with only option to illustrate its full commitment to transparency in the process, ensuring no traces of favouritism and nepotism. Any monopolies aiming to build their hegemony must be condemned to avoid benefits from moving into fixed hands. On the other hand there is dire need of speeding up the process as by now, the commission has only finalized the list of the enterprises it intends to sale while details of its privatization agenda are nowhere to be seen.

Also, as called by the Finance Minister Ishaq Dar, the Commission must come up with a reduced time frame for completion of the process from the previous period of 18 months to ensure speedy business. The sooner it happens, the better. Any unwanted delays in the plan will only add to the woes of the government and will only strengthen to the voices raised against the much needed plan.


News Desk

Economic Affairs Editor

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