The privatisation show

With a road show under way in Washington to announce the privatisation plans for Pakistan’s power sector, this is a good time to take stock of the PML-N government’s privatisation plan. That the privatisation of public enterprises is central to the economic ideology of the PML-N is a no-brainer. However, the government’s proposed privatisation plans have begun to come under question from its principal benefactors. The IMF has made sure to mention that it feels that the Pakistani government is some way off its stated privatisation schedule. This was after the government promised a December deadline for privatising Pakistan’s troubled aircraft carrier, Pakistan International Airlines while committing to privatising the Pakistan Steel Mills by March 2016. We have all seen how this government likes to do things by creating a lot of hype and fanfare around them; however, there certainly seem to be major questions on its ability to generate any money from selling loss-making entities, including PIA, PSM and the power distribution companies. What pitch has been offered to US investors in Washington is anyone’s guess, but it is certain that the government will be willing to offer fairly benign terms to international investors to bring them to bid for entities which are in far from stable financial health.
With the Senate wishing to question the Privatisation Commission’s plans to go ahead with the privatisation, the commission seems to prefer putting on a show for investors than answering questions put forward by the country’s legislators. Privatisation Commission officials had been asked to brief the Senate Standing Committee on Finance and Revenue on Thursday about their privatisation plans. It seems the commission would rather only generate the ‘right’ kind of press with the commitment made to the IMF to engage in large-scale privatisation apparently non-negotiable. The fact that there is little interest in briefing public representatives about privatisation plans reveals the government’s preference to keep the temperature down as it goes about privatising key national assets. Privatisation should not take place behind closed doors as has been the case in the country. Investors have later often back-tracked on agreed upon commitments to the government; the lack of public accountability of the deals is often a much cited reason for that. Moreover, the government appears not to have factored in the formidable strength of the unions in all state enterprises. The government’s commitment to privatising PIA by December seems fickle if its ability to manage the PIA pilots strike is to be used as a yardstick. The biggest problem with the privatisation plan is the lack of national debate on the subject. For instance PIA is a major national security player and the institutional input of security stakeholders has to be factored in. The government’s preference is: ‘the quieter, the better,’ but it must tread with caution because with this strategy it may not win over public opinion on the side of privatisation.