One of the major economic woes of the country is devouring of substantial amount of revenue by huge losses making state enterprises. Either restructuring or outright sale of these entities has always proved to be hard nut to break for political reasons, procedural delays and shy attitude of private sector. A review meeting of Privitisation Commission was held to apprise Federal Minister for Privitisation of the progress so far made on the ongoing transaction process of few public sector entities. The enterprises which have been priortised for this purpose do not fall within the category of taking heavy toll on the national exchequer. The entities include SME Bank, Services International Hotel, National Power Park Company, Services International Hotel, Jinnah Convention Center and 28 high value properties. Matters relation to the restructuring of closed Pakistan Steel Mill also came up for deliberation in the review meeting.
Hemorrhaging public sector enterprises eat up a great chunk of national revenues every year and their sale value is also fast depreciating. But offloading the financial burden of losses incurring state entities has not been seriously taken by successive governments. In the present government also, the fate of 56 such entities has not been decided in several meetings that had been held by the Privitisation Commission for this purpose. Irked by the snail pace of privitisation process, Prime Minister Imran Khan had chaired a meeting of concerned ministries few months ago and he had directed for completing on fast track the privitisation procedures, particularly of bleeding state corporations, within the stipulated time by maintaining close inter-ministerial coordination.
The Council of Common Interest had approved 62 public sector entities for privitisation in its meeting of October 2018. But on the contrary, Privitisation Commission opted for a skewed policy and picked 11 profit making enterprises for disinvestment; put the privitisation of 24 non-profit state entities on the back burner; and dropped 29 bleeding enterprises from the privitisation list. The disinvestment of profit earning state enterprises provides easy money that may or may not help in small reduction in fiscal deficit. The closed and running into huge losses enterprises push up budget deficit in a big way which may reach to over 9 percent of the GDP during current fiscal year. The annual losses of inefficient public sector enterprises stand at Rs. 400 billion and cumulative losses have reached to Rs.1.8 trillion. Trade bodies have voiced grave concern over the wastage of taxpayers’ money on these corporations.
The governments of other PPP and PML-N had adopted divergent policies on the losses incurring state entities. The leadership of PPP used these organisations as political support base and recruited crowds of party workers in them in addition to placing their cronies in the top management cadres, allowing them hefty salaries and perks at the cost of national kitty. It was the policy of nationalization of private industries and banks in the first PPP government in 1972 that ruined the economy by scaring away private investment and initiatives of entrepreneurial class for induction of latest technologies and products’ innovations.
The PML-N and PML-Q governments had always pursued a policy of selling profit making state enterprises at throw away prices to their business partners. An amount of Rs.4 billion is still outstanding against the buyers of 14 public sector industrial units the ownership of which was acquired in the first two tenures of PML-N governments. In the PML-Q government in 2006, the management of golden eggs laying hen like PTCL was handed over to UAE Telecom Company Etisalt on the purchase of 25 percent shares, violating the standard procedure of transferring management on the acquisition of 51 percent shares. The entire sale proceeds of 25 percent shares were also not retrieved and $800 million had remained outstanding. Since then the matter of clearing PTCL arrears was not taken up by the previous two governments, while giving precedence to vested interest and jeopardizing national interest. The present government took up the issue and Etisalt has offered few months back to settle the outstanding claim of Pakistan for $250 million. The dispute is yet to be resolved on terms and condition acceptable to the government and Etisalt. Perhaps the Privitisation Commission still wants to prefer disinvestment of profitable state enterprises instead of putting on the front burner losses making entities for privitisation.
