Shift in privatisation mode makes process slower

ISLAMABAD: Privatisation process remained slow during the last thirty months mainly because of a shift in government’s policy from strategic sale of assets to public-private partnership.
Only one entity has been sold since the PPP government came into power, which yielded Rs1.34 billion, although the Privatisation Commission has a list of 23 units to be sold.
Secretary Privatisation, Muhammad Ejaz Chaudhry, told The News that the commission was mostly dealing with those entities that are either sick or loss-making. “Any smart investor will definitely think twice before making huge investment in these entities,” he added. “However, the government is making its all out efforts to sell these entities.”
The list includes SME Bank Limited, Peshawar Electric Supply Company (PESCO), Quetta Electric Supply Company (QESCO), Hyderabad Electric Supply Company (HESCO), National Power Construction Company (NPCC), Faisalabad Electric Supply Company (FESCO), Jamshoro Power Company Limited (JPCL), Heavy Electrical Complex (HEC), Pakistan Machine Tool Factory (PMTF), Pakistan Mineral Development Corporation (PMDC), Morafco Industries, Pakistan Railways, PTDC motels and restaurants, Utility Stores Corporation (USC) and stores, Pakistan Post, Kot Addu Power Company (KAPCO), National Insurance Company Limited (NICL), Pakistan Reinsurance Company, State Life Insurance Corporation (SLIC), Printing Corporation of Pakistan, Services International Hotel, Sindh Engineering Limited and Republic Motors Limited.
The Privatisation Commission has 12 active transactions of Pakistan Post, SME Bank Limited, Heavy Electrical Complex, Pakistan Machine Tool factory, Pakistan Mineral Development Corporation, National Power Construction Company, Morafco Industries, Islamabad Electrical Supply Company, Peshawar Electrical Supply Company, Quetta Electrical Supply Company, Hyderabad Electrical Supply Company, Faisalabad Electrical Supply Company and Jamshoro Power Company Limited.
Since the start of privatisation process in 1991, the federal government has sold 167 units bringing an investment of Rs476.42 billion till June 2010.
A former consultant of PC said the government could have privatised a number of units had it been sincere, but it instead recruited more party workers at lucrative posts in these sick units.
The Musharraf regime sold entities worth $2.805 billion in 2001-08 period: $128 million in 2001-02, $176 million in 2002-03, $199 million in 2003-04, $363 million in 2004-05, $1,540 million in 2005-06, $266 million in 2006-07 and $133 million in 2007-08.
Sale of PTCL to UAE-based Etisalat by transferring 26 percent B class shares at $ 1.326 billion was a major transaction during the Musharraf regime.
The new privatisation policy was approved by a cabinet committee on Feb 17, 2009, and ratified by the cabinet on Jan 6, 2010.
This new policy revolves around sale of 26 percent equity stake with management rights through a PPP model, said one of the officials designated for divesting 23 units.
But this new policy failed to attract investors said the official.
According to official estimates, the federal government is throwing over Rs400 billion annually to the loss-making public sector entities.
Putting these entities on the right track will help the government improve the lives of people, said Ayub Siddiqui, an economist.
He said the government had limited revenue resources. Either it had to take stringent budgetary measures or generate more resources by widening of tax base and privatisation, he added.