Ideal public-private partnership still a distant dream

LAHORE: Successive governments in Pakistan have been trying to evolve an ideal public-private partnership concept to accelerate growth in certain sectors of the economy, but the deliverance remains pathetic as the rulers impose their agenda on the boards.

There are two modes under which the government seeks assistance of the private sector. The first is in specific projects where government lacks funding. In this case the project is funded by the contractor who recovers the amount under a contract by collecting toll in the case of roads or bridge for a certain number of years. The period is considered enough to cover the cost, profits and mark-up on the investment made. There are few snags in such projects if the contract is awarded on merit through a transparent procedure.

The other public-private partnership is sought in operating companies in the economic sector. The federal government for instance involved private sector in building industrial estates through the National Industrial Parks Company. In 15 years, this company has not made a single industrial estate operational.

Pakistan Stone Development Company was established more than a decade back to promote efficient mining of marble and granite, but the older ways of blasting still exist, and Pakistan is now importing more tiles and stones than ever. Pakistan Gems and Jewellery Development Company, established in 2007 also has not really delivered yet.

The Punjab government established Punjab Agriculture and Meat Company more than a decade back, which failed to eliminate or even make a dent in the powers of the middlemen who control marketing of all agriculture produce in the country.  Punjab Industrial Estates Development and Management Company (PIEDMC) and Faisalabad Industrial Estate Development and Management Company (FIEDMC) were launched at the same time during the Pervaiz Ellahi era. The PIEDM delivered by establishing state of the art Sundar Industrial Estate and upgrading Multan and Quaid e-Azam Industrial estates in the province, but FIEDMC failed. Both were established on the same concept and similar amount of seed money by the provincial government.

The PIEDMC in the next 12 years showed lopsided performance. It excelled during the tenure of its first private sector chairman, and lost most of its reserves when a bureaucrat replaced him. It went down further when the Shahbaz Sharif-led government appointed another private sector chairman, but revived during the tenure of the next one.

The board of governors was reconstituted to include 18 directors from the private sector and four from the bureaucracy. The board was empowered to appoint the chief executive officer instead of the chief minister. This autonomy did the trick. The company launched five new industrial estates around Punjab. It generated funds from the sales of plots in these industrial estates.

Currently it is sitting on reserves of Rs3 billion. The board has now been dissolved as most of the directors and chairman completed two terms of three years each. The outgoing chairman and the directors belonging to large business houses did not avail any facility not even conveyance from the company and bore all their travelling expenses to different industrial estates of the province.

Now the question is whether the performance was better due to the strong chairman or an independent board. The new chairman has been appointed by Punjab Chief Minister, though according to the Securities and Exchange Commission of Pakistan, it is the prerogative of the BOD of the company.

The concept of public-private partnership dies if one person has the discretion to appoint the board of directors. There should be some criteria. One way is that of academic qualification and the other is that of representation of different industrial sectors, largest player/exporter in the sector.

This would make the board responsible as it would not be beholden to anybody. Currently a leading carpet exporter is heading the Apparel Park Company of Punjab government. The question of perks and privileges of the chairman and the directors should also be transparently stated to avoid exorbitant demands made by some chairmen in the past.