PM on bleeding state enterprises

Presiding over a meeting of Ministry of Industries, Prime Minister Imran Khan once again emphasised for streamlining the privitisation process of huge losses making public sector industries to offload the recurring heavy burden on national exchequer. Irked by the snail pace and pick and choose process of privitisation of over 50 state entities, the Prime Minister had chaired a meeting Ministries of Industries, Planning, Finance and Privitisation Commission in the first of week of this month and had directed for completing it within the stipulated time.

In the meeting, Prime Minister was apprised about of performance of 38 industrial units out of which 13 are on the privitisation list, 10 have been recommended for merger and administrative control of remaining 5 entities shall be transferred to the relevant divisions and provinces. The chronic issue of sheer waste of scarce financial resources, raised through taxpayers’ money, on losses incurring shut down and running public sector enterprises has not been seriously addressed by successive governments. In the present government also the fate of these white elephants has not been decided in several meeting of Privitisation Commission during the past one and half year.

The Council of Common Interest had approved 62 public sector entities for privitisation in its meeting held in October 2018. But amazingly, Privitisation Commission resorted to strategy of selling the family silver first and picked 11 profits making enterprises for divestment; put privitisation of 24 losses accruing entities on the backburner; and dropped 29 bleeding enterprises from the privitisation list. The strategy was identical to the one adopted by PML-N governments. The sale of assets of profit earning enterprises may or may not reduce budget deficit. But on the contrary, the running losses of closed and partially operational state entities had pushed up the fiscal deficit to over 7 percent of gross domestic product in the last fiscal year. The annual losses of public sector enterprises stand at Rs.400 billion and the accumulated losses have reached to.Rs.1.8 trillion. Trade bodies have been showing concern over throwing more and more financial resources for keeping the hemorrhaging public sector enterprises. That is why Prime Minister has asked the Ministry of Industries to take consultative input from business community and experts of change management.

The governments of other two mainstream political parties, PPP and PML-N, pursued divergent policies on different categories of state entities. The leadership of PPP used these organisations as political support base as they, while in government, recruited crowds of party workers in them in addition to placing their cronies in the top management cadres, hiring them on hefty salaries and other perks at the cost of national kitty. On the contrary, governments of PML-N and PML-Q implemented policies of selling out sufficient profits making enterprises at throw away price to local and foreign investors. An amount of Rs. 4 billion is still outstanding against the buyers of 14 public sector industries, the ownership of which was acquired in the first two tenures of PML-N government. In the PML-Q government in 2006, the management of high profit earning PTCL was handed over to UAE Telecom Company Etisalt on the purchase of 25 percent shares, violating the standard procedure of 51 percent mandatory purchase of shares for taking over management of a state entity. Etisalt then resorted to bullying tactics by withholding $800 million of PTCL shares ‘sale proceeds. The UAE ‘Aqama’ holding leadership of PML-N and PPP dis not dare press for the payment of PTCL arrears. The present government actively pursued the matter and now Etisalt has offered payment of $250 to settle the outstanding claim of Pakistan about PTCL privitisation proceeds. Hopefully, privitisation of losses incurring state entities will get priority.