Government urged for steps to privatise public sector entities

LAHORE: The government should make all-out efforts to privatise public sector entities on a priority basis and delaying the privatisation process will strengthen vested interests, economists said o0n Tuesday.
Delay in the privatisation of state-owned enterprises and too much of trumpeting of investigation into previous privatisations are in fact a message to investors to stay away from the process.
However, they emphasised that the privatisation process should be carried out in a transparent and impartial manner to ensure prompt endorsement from the judiciary.
Economist Naveed Anwar Khan said, "When the nation is going from pillar to post to generate revenues, we are suffering billions of rupees to a few public sector companies."
Although all the public sector companies should be handed over to the private sector, those making huge losses should be privatised first, he said.
Khan said that liquidation of government shares in HBL and UBL was basically an exercise to generate revenues, as the government was getting due share in profits generated by their private sector owners.
These profits, he said, had at least reduced to some extent the losses made by some larger public sector companies.
Privatisation Commission Chairman Mohammad Zubair had informed the upper house last week that since the stopping of the privatisation of Pakistan Steel Mills by former chief justice Iftikhar Muhammad Chaudhry in 2006; the accumulated losses of has gone up to Rs200 billion.
He also said that the accumulated losses of Pakistan International Airlines (PIA) now stand at Rs226 billion and any unusual event may extend its privatisation deadline further ahead from December 2018.
He said vested interests create hitches to stop privatisation; the latest being interest shown by the Sindh government in buying PSM. The basic aim of the government is to get rid of the loss-making public sector entities and no transfer ownership from federal to provincial government, he said.
Khan regretted that the Cabinet Committee on Privatisation (CCoP) on October 2, had decided that the government of Sindh should be offered to acquire PSM with all its assets and liabilities.
Political appointments without any merit have flooded the government sector companies with incompetent human resource, he said, adding that the public sector companies are overstaffed.
The new buyer should be given the right to retain only qualified staff and the rest should be transferred to surplus pool of the government, he said.
The economist also said that they should either be offered a shake hand severance allowance or the government bears their salaries, which would be nominal as compared to the huge losses that the state suffers in the loss-making companies.
Senior Market Analyst Dr Shahid Zia said for PC both PIA and PSM have now become a case where extra caution is delaying the process and both have not attracted any credible foreign investor so far, while in total violation of the Privatisation Ordinance Section 27 the investigation of previous transactions by NAB are scaring away not only potential investors for new cases of SoEs, but the existing foreign investors of privatised entities.
He said the state should not violate laws to tame businessmen. Section 27 of the PC Ordinance bars government or any of its agencies to oversee, scrutinise or investigate any privatisation transaction within one year of the completion of the process.
However, he said, NAB is currently investigating some cases media hype of which is obstructing governments’ efforts to attract investors for further entities.
The irresponsible behaviour shown by the government officials, including NAB and some of the politicians with vested interests show that those investing in the country are doing so at the risk of being left out to dry alone.
He said under the privatisation law if an institution is to be privatised it has to be placed under the administrative control of the Privatisation Commission. However, although the government has assured the IMF to privatise PIA immediately, it is still under the control of the aviation authority.
HBL and UBL were loss-making entities, while in government control. Now these banks are paying billions in taxes. In fact, he said the total tax paid by these two banks in a decade after privatisation is higher than the price at which these banks were privatised. He said MCB Bank is half the size of the state-owned NBP, but is paying double the taxes.