Pakistan govt divided over privatisation programme

Pakistan’s federal cabinet has been divided over the privatisation of public sector enterprises which have been incurring a cumulative loss of Rs300bn per annum due to inefficiencies and bad governance.

In a recent meeting of the cabinet, some cabinet members raised concern over the planned privatisation of profitable state-run companies whereas some of them argued that it was not the government’s business to run commercial organisations.

They also voiced concern that nonoperational companies were being removed from the privatisation list. However, the cabinet members were unanimous in their view that no proposal had been floated to privatise government hospitals.

They pointed out that the government had planned to give greater independence and autonomy to hospital management in an attempt to improve service delivery. Sources say that during a meeting, chaired by Prime Minister Imran Khan, it was informed that a meeting of the Cabinet Committee on Privatisation was held on September 18, 2019, which approved the privatisation of some state units. The committee recommended those cases for ratification by the cabinet. It recommended that Telephone Industries of Pakistan should be removed from the privatisation programme.

The companies recommended for privatisation included National Power Parks Management Company Limited, Islamabad Electric Supply Company and State Life Insurance Corp. During discussions, the cabinet members aired concern over the fate of earlier privatisation transactions and asked whether any review had been carried out and lessons learned. Questions were raised over the rationale of privatising profitable entities and giving priority to different enterprises on the privatisation list. Some members pointed out that it was not the government’s job to run commercial enterprises. Another view was that while there were no reservations about the concept of privatisation, the principles were not clear. Profitable entities like State Life were being listed for privatisation while at the same time non-operational Telephone Industries of Pakistan was being removed from the list.

Some cabinet members were of the view that continued the listing of an enterprise for privatisation for a long time had badly affected employee morale and the company’s performance. It was revealed that public sector entities were incurring losses of more than Rs300bn per annum, which were not sustainable. No major privatisation transaction had taken place over a long time.

It was also pointed out that banking sector entities, which had a combined zero rate of return in the public sector, increased their return to the government a hundred times after privatisation in the form of dividends and taxes.