Privatisation concerns

Privatisation of essential services can lead to some unforeseen challenges

Privatisation concerns


In March, Minister for Privatisation and Investments Abdul Aleem Khan called for the privatisation of at least 15-20 loss-making public entities. “In the present circumstances, 15 to 20 institutions must be privatised immediately,” Khan said. Last September, the then caretaker government had earmarked 10 state-owned enterprises for privatisation.

The Pakistan International Airlines has debts and liabilities of Rs 180.6 billion (as of September 2023). The losses of Pakistan Steel Mills stand at Rs 40.3 billion. It makes sense to get rid of such entities.

However, privatising public sector organisations, such as the Pakistan Post whose total loss is less than Rs 10 billion, will hardly solve a problem.

The government’s plan to privatise Pakistan Post and other essential services appears to be a half-hearted attempt to stave off the financial crisis. This plan might ultimately prove counterproductive and lead to waste of precious national resources. The privatisation of critical services like the post office is likely to have negative consequences for the citizens, particularly the poor who heavily rely on its affordable and reliable services.

The Pakistan Post has long been an integral part of the country’s socio-economic fabric, serving as a reliable mode of communication and a lifeline for many individuals and businesses across both urban and rural areas. Its extensive network, with more than 11,000 departmental and extra-departmental post offices, spanning the length and breadth of the nation, has enabled countless people to stay connected and conduct their affairs seamlessly. The affordable rates at which the Pakistan Post offers its services have made it an indispensable resource for those who cannot afford more expensive alternatives available in the market.

Privatisation plans for the Pakistan Post and other essential services represent a significant shift in the government’s approach to governance and public service provision. Poponents of privatisation argue that it will lead to greater efficiency, innovation and cost-effectiveness. However some people fear that it may come at the expense of easy accessibility, affordability and quality of service. The privatisation of essential services like the post office raises several critical concerns that need to be carefully considered before a definitive action is taken.

First and foremost, the privatisation of the Pakistan Post is likely to result in a rise in service costs, making it less accessible to the average citizen, especially those in low-income groups. The shift from a public service to a profit-driven enterprise may lead to pricing strategies that prioritise profitability over public service obligations, potentially excluding marginalised communities from accessing essential postal services. This could have far-reaching implications for individuals who rely on the Pakistan Post for important communication (letter mail), financial transactions (e-commerce facilities like Cash on Delivery, Value-Payable Parcels) and business operations involving money remittances.

The privatisation could also have negative implications for the overall quality of service. Public sector entities are often bound by stringent regulations and service standards that prioritise public welfare over profit-making. However, once the department is privatised, these standards may be relaxed or overlooked in favour of maximizing profits, potentially compromising the reliability, efficiency and timeliness of the services. “In developing countries, privatisation often leads to price hikes, layoffs and reduced access to essential services for the poor. It exacerbates inequality and undermines the social welfare,” says Joseph Stiglitz, the Nobel laureate economist.

Pakistan Post’s extensive network, with more than 11,000 departmental and extra-departmental post offices, spanning the length and breadth of the nation, has enabled countless people to stay connected and conduct their affairs seamlessly.

Furthermore, the privatisation of the Pakistan Post raises broader questions about the government’s responsibility to provide essential services to its citizens. Public services like postal services are seen as a public good that should be accessible to all members of society, regardless of their socio-economic status. By privatising these services, the government risks abdicating its responsibility to ensure equitable access to essential services and may inadvertently deepen existing social inequalities. “The privatisation of state assets in developing countries has often led to a situation where vital resources are controlled by profit-driven corporations compromising the public interest and leading to social inequalities,” says Yashpal Tandon, a Ugandan political economist.

In addition to concerns about accessibility and service quality, the privatisation of the Pakistan Post also raises issues related to job security and employment opportunities for postal workers. The transition to a privatised postal service may entail workforce restructuring, layoffs and changes in employment conditions that could adversely affect the livelihoods of more than 40,000postal workers across the country. The social and economic consequences of such changes must be carefully assessed to minimise the impact on the affected individuals and their families.

The privatisation of the Pakistan Post could have wide implications for the country’s economy and national infrastructure. As a critical part of the communication and logistics ecosystem, the post office plays a significant role in facilitating trade, commerce and connectivity within and beyond Pakistan’s borders. Any disruptions or inefficiencies resulting from the privatisation of postal services could have ripple effects across various sectors of the economy, impeding growth and hindering development initiatives like financial inclusion of marginalised strata of society.

It is imperative that a thorough and transparent assessment of the implications of privatising essential services be conducted. Stakeholders from various sectors, including civil society organisations, business associations, Pakistan Post’s employees and the general public, should be actively engaged in the decision-making process to ensure that their voices and concerns are heard and considered. A comprehensive cost-benefit analysis, encompassing social, economic and environmental factors, should be undertaken to evaluate the long-term impact of privatisation on the nation as a whole.

The proposal to privatise the Pakistan Post and other essential services raises a host of pressing concerns that warrant careful consideration and scrutiny. The potential consequences of privatisation, including reduced accessibility, diminished service quality, job insecurity, and economic repercussions, necessitate a comprehensive evaluation of risks and benefits associated with such a move. As the government contemplates the future of critical public services in Pakistan, it must prioritise the interests of its citizens and strive to strike a balance between fiscal prudence and social accountability.

“The rush to privatisation in developing countries has frequently overlooked the needs and rights of the most vulnerable population leading to increased social exclusion and marginalisation,” says Amartya Sen, the Indian economist and Nobel laureate.

The writer is a civil servant

Privatisation concerns