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August 21, 2019

Govt’s initiative to revive sick units loses steam

Top Story

August 21, 2019

ISLAMABAD: Amid escalating net losses of public sector enterprises (PSEs), the PTI-led government’s initiative of reviving sick units through Sarmaya-e-Pakistan Limited (SPL) has lost its steam as some private members of its Board have tendered their resignations.

When SPL came into being after hectic deliberations of four months during the last financial year with the approval of the cabinet the SPL Board was established with the participation of private members. But it could hold its first meeting before resignation of former finance minister Asad Umar. After his exit, the SPL Board was never convened to hold its meeting. The Board members who were brought to become part of it, had to face a lot of discouragement and now some of them had forwarded their resignations because no meeting held in last several months.

Top official sources confirmed to The News on Tuesday that some members of SPL Board tendered their resignation because they found that there was no interest from the top level of the government to undertake any serious efforts to revive loss making state owned entities.

Actually with change of guard at Finance Ministry, the Adviser to PM on Finance Dr Abdul Hafeez Shaikh wanted to see progress on privatisation front instead of placing any mechanism to revive sick units first and then run them on the basis of public private partnership (PPP). The privatisation process is running at abysmal pace as two RLNG plants are on the sale list of Privatisation Commission but so far it could not be done because the government lacked focus on economic front. Now the Privatisation Commission high-ups argued that these two RLNG based power plants might be privatised till Oct/Nov of this financial year.

When former finance minister Asad Umar was contacted for comments on Tuesday, he said that he had put a lot of efforts to establish SPL after getting approval of the competent forums. Before tendering resignation, he said that the Board had once met in which they decided to give chairmanship to Ehsan Malik and he did not know why SPL could not become functional afterwards.

This scribe sent out question to Ministry of Finance spokesman for getting official version but got no response till the filing of this report. The PTI-led government had replicated Malaysian and Singapore model for reviving cash-bleeding state-owned enterprises during the last financial year when Asad Umar was holding the charge of finance minister in February 2019. They came up with establishment of SPL.

With paid up capital of Rs100,000, the government did not share any further plan during the era of former finance minister but in background discussion they always informed journalists that the PSEs would be revived through public private partnership. At that point of time, the PTI had shelved plan to privatise some of the major loss-making entities such as PIA and Pakistan Steel Mills and power sector distribution companies but they were all set to revive them through creation of wealth fund in a bid to run these entities out of clutches of bureaucratic hurdles in line with the manifesto of the PTI.

The government had nominated three officials including the Finance, Industries and Division secretaries as members of board of directors, while eight other members from private sector were made part of the Board of Directors including Musharraf Hai, Kamran Mirza, Nadeem Babar, Zubyr Soomro, Atif Aslam Bajwa, Ehsan Malik, Waqar Malik and Badar Sadat.

The SPL was set up on recommendation of Finance Ministry after taking into account the models Malaysia, Singapore. With time all public sector enterprises will come under this one company. Total net losses of Pakistan’s state owned enterprises have escalated to Rs191.5 billion in financial year 2016-17 against Rs44.7 billion in 2015-16.

In fiscal year 2014-15, the SOEs in totality were running into net profits of Rs52 billion but it had turned into net losses of Rs44.7 billion during 2015-16 that now jumped up to Rs191.5 billion. As the PTI-led regime has not yet undertaken any reform so there are strong chances that the net losses of SOEs might have gone much higher in last couple of years of 2017-18 and 2018-19.

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