close
Monday December 06, 2021

Intangible objectives

September 14, 2021

LAHORE: Revamping the loss-making public-sector enterprises has never been successful in Pakistan. Failed solutions experimented by earlier governments are tried again with different angles that invariably further increase the losses.

Privatisation in Pakistan has primarily been limited to disposing off the real estate owned by the government. Or the government is making hectic efforts to privatise the two-profit making gas-run power plants.

Privatising huge loss-making public-sector entities is not a state priority. As soon as a new government is formed, the top management of the loss-making enterprise is changed with persons of the new premier’s liking.

Incumbents point out that the earlier management was weak, corrupt or incompetent. However, earlier managements’ corruption is neither investigated nor the governance model changed.

Thus, the change inevitably fails to make any visible improvement. Then the government tries another set of experts. All these appointments lack merit. In many cases, it is like asking an engineer to perform a heart surgery.

No government in Pakistan loses hope when the changed management fails to bring about a positive change in the operations of the public sector entity. They keep the option of privatisation on the back burner till revamping is accomplished.

Rulers then sit together with the bureaucracy and appoint a committee to study the causes of failure of the institution. Since the institution is already on ventilator, the measures suggested by committee to revamp it fail. This is taken as an insult by each government that comes to power in Pakistan.

The bureaucracy advises them to arrange visits to foreign countries and find out how similar institutions in those countries were operating successfully. They cite examples of some revamped public institutions that in fact were not a lost cause, but faced other issues that were resolved. The foreign trips add to the credentials of bureaucrats, but fail to make the dead institution alive.

They then lower the standards so that the institution could continue to operate. The argument given is that it is providing employment to thousands of people. Machinery and equipment installed in the institution is many times the price being offered by the private sector. The bureaucracy also argues that handing over institutions to the private sector would create monopoly and increase the price of the services it provides.

They conveniently ignore that the inept institution is providing low quality services and products or no service at all. The end result is that they convince the rulers to let the institution operate on somewhat reduced losses.

They thus reclassify the dead institution as living-impaired. Pakistan International Airlines and Pakistan Railways are the recent examples where the state claims that losses have been reduced.

When they see that nothing improved despite adopting the above measures, they hire foreign experts to make the institution vibrant. The foreign experts, if genuine, suggest closing it down, but that advice is ignored.

If the expert also wants a share in booty, he asks for fresh investment that would be managed by the same incompetent and corrupt machinery. The bureaucracy never tires of forwarding suggestions in its bid to infuse new life in the dead horse.

It asks for additional funding and capacity building of the management of the institution preferably in a foreign country. Several new studies are suggested to revamp the institution. Innovative ways of increasing productivity are put forward ignoring the fact that the employee culture in the institution is not to increase productivity but to pass time.

There is no dearth of suggestions and arguments that are put forward to feed the dead institution. We have seen this in the case of Pakistan Steel Mills that has finally been closed and its employees given marching orders.

Still the mill is not up for privatisation. The plan is to hand it over to a private sector operator to run it without much dilution in government’s shares.

The arguments against privatisation include harm to national pride or in some cases harm to national harmony. These institutions continue to bleed the national exchequer, reducing the resources for the development of federating units.

No regular loss-making institution ever has been revamped in Pakistan. Nationalised banks were first targeted for restructuring in 1997, conveniently ignoring the fact that earlier privatised MCB without restructuring was going great.

A lot of money was poured into HBL and UBL, but they remained huge loss-making entities when privatised a decade later. Cosmetic measures do not improve institutions. They need solid and fearless actions.

Huge amounts have been poured in PIA to bring back its lost glory. New fleets bought on government guarantees rusted without improving the performance of the airline.

Still hectic efforts and huge amounts are being spent to reenergise the national carrier, but results are still not showing any improvement. Pakistan Steel Mills has proved to be a white elephant. Story of Railways is not different. Its passenger and goods operation should have been privatised, leaving the infrastructure maintenance to the Railways.