Privatisation confusion

It was only a question of when the current government, committed to the cause of austerity, would bring up the privatisation of state organisations. Much like the PML-N government before it, the PTI leadership believes that state-sector organisations are a drain on the state’s resources and must be sold off. But this does not sit neatly with its decision to announce a separate fund for the revival of state-sector organisations. The confused logic reads as: state-sector organisations need to be sold, but they can only be sold once they become profitable. Which leads to obvious questions: why sell them when they become profitable? And why use state funds to improve the performance of organizations that will be sold off to the private sector? No one has ever offered satisfactory answers to these questions. The point is simple: if the government wants to sell off loss-making organisations, it should do that in their current state. If the private sector is so good, it should find a way of turning them around. The Pakistani state cannot be expected to turn them around for the private sector to reap the benefits. Moreover, the simple fact is that the current Pakistani state simply cannot turn these organisations around.

The decision on privatisation was announced in a session of the National Assembly’s Standing Committee for Privatisation. According to the plan, 49 state-sector organisations are set to go under the hammer in the next five years. The government has taken 15 companies out of the privatisation list and added eight more to it. The NA committee was told the story of the losses that PIA and Pakistan Steel Mills have accumulated over the years, but it rarely accounts for the full story. For example, how could PSM post a profit of Rs9.5 billion only a decade ago, amidst Musharraf’s botched attempt to privatise it, and then run up Rs200 billion in losses in a decade?

It would seem that the decision to privatise it came first, the losses came after. Does that mean there was no case to privatise PSM when it was first put under the hammer? The issue of privatization in Pakistan has always treaded in murky waters. State-sector organisations seem to be brought to ruin by design, rather than through their own inefficiencies. What is interesting, however, is the decision to take PIA and PSM off the privatisation list. Does this mean that the government is looking into the matter with fresh eyes? It certainly gives confusing signals when it says it intends to sell seven public entities doing reasonably in the next year and a half, but wants to keep those making the greatest losses. There needs to be more clarity about the next privatisation ride Pakistan is going to be led on.