Senate committee stresses privatisation of state-run entities

ISLAMABAD: Senate Committee on Privatisation and Statistics on Wednesday stressed a need for privatising state-run companies that are annually bearing around Rs700 billion in losses. 

“Now, we should get rid of the loss-making entities,” Danyal Aziz, chairman of the senate body told the meeting. “State-run units are bearing a loss of Rs600 to Rs700 billion annually. These loss making entities are burden on budget.”

Aziz said such state-run companies dampen the economic structure of the country. The fiscal deficit already rose to 5.8 percent of GDP during the last fiscal 2016/17 as against the target of 3.8 percent, and 4.6 percent in FY2016. 

“A large primary deficit, 1.6 percent of GDP – the highest during the last four years – indicates that expenditures other than interest payments have increased,” the State Bank of Pakistan said in a report.

“The higher deficit in FY17 was, nevertheless, due to slower growth in revenue
collection as well as a sharp increase in total expenditure.”

Government announced to privatise lose-making state-run organisations, including Pakistan International Airlines (PIA), Pakistan Steels and others that drain on national exchequer, one year after it assumed the office. 

Former prime minister Nawaz Sharif-led government could not gather support to privatise PIA, Pakistan Steels and Pakistan Railways despite the ex-premier Sharif succeeded in initiating privatisation process in his 1990’s tenure.  

Alone the losses of three government-owned organisations soared to over Rs700 billion in three years despite they frequently received dole-outs from the government. 

Senate committee told that total losses and accumulated losses of Pakistan Steels and PIA currently stood at Rs176 billion and Rs316 billion, respectively. 

Government received over one billion dollars on account of privatisation receipts during the last four years: $310 million in 2013/14 through divesting shares in United Bank Limited and $764 million by selling its stake in Habib Bank Limited in 2014/15.  

Aziz of senate body said government has pocketed Rs648 billion through selling of state-run units since 1991. Government considers public sector enterprise reform and privatisation important for reducing fiscal costs and contingent liabilities and for enhancing efficiency. 

Officials, in a meeting with the International Monetary Fund in July, said aggregate annual losses of public sector enterprises remain modest and have been declining. Government will continue to improve their financial situation through restructuring to enhance their attractiveness to private investors, they added.