Privatisation policy criticised

'The government needs to revisit its privatisation policy by forming of local consortia and ensuring that only loss-making public enterprises are handed over to foreign investors, who start repatriating profits immediately after taking over running units.' Opposing the blind-folded privatisation of profit oriented units, the Pakistan Democratic Party (PDP) Chief, Nawabzada Mansoor Ahmed Khan said.
Talking to newsmen on Friday, he pointed out that a flawed privatisation policy of the previous government has effectively stopped foreign direct investment in green projects in the country.
All foreign investors are eyeing public sector companies at throw-away prices, he said adding that the investors practice the method to squeeze out profits without going through the hassle of planning and developing a project and then wait for two-three years before going into profit.
During the past 18 years, he said, the government has privatised national assets worth Rs 476 billion. Out of these, major profit-making enterprises have been sold to foreign buyers. These companies include Pakistan Telecommunications Company (Ptcl) sold to Etisalat for Rs 156.32 billion (since the payment was in dollars as on July 5 and full payment has not yet been received, the amount would exceed in rupee).
Other enterprises are Kot Addu Power Company (Kapco) for Rs 11 billion and Habib Bank for Rs 22.4 billion. Khan further said that foreign investors did buy some banks and other companies that were revamped and were on the verge of turnaround like the United Bank and Bank Alfalah.
In fact, a local bank was the highest bidder of the UBL, but the then government rejected its bid and resorted to a non-transparent method for its sale to a foreign buyer. He stated that there was no need to hand over liquefied petroleum gas businesses of Sui Southern Gas Company (SSGC) and Sui Northern Gas Pipelines Ltd (SNGPL) to foreign oil companies.
These could have been handed over to domestic investors through better marketing, convincing and awareness. The PDP Chief further pointed out that outflow of huge capital during the past one decade, shows that local investors have money but they do not have confidence in their government. Foreign investment is fully protected, while local investors are prone to blackmailing by the authorities.
The argument that foreign investors bring in better technology or boost productivity has been proved wrong, if the performance of companies acquired by foreign investors or local entrepreneurs is compared. 'The Allied Bank has made all its branches online much earlier than the banks taken over by foreign investors. MCB Bank has made handsome progress after being handed over to a local investor,' he said.
Further, Al-Ghazi Tractor was acquired by a foreign investor and Millet Tractor was taken over by the Employees Management Group. The performance of both companies is open to all and there is no doubt that Al-Ghazi has made good progress, but Millat too has taken equivalent or better leaps. The cement sector acquired mostly by local investors has reached new heights and is on way to become a major source of bringing in foreign exchange in coming years, he claimed.
According to the experts, public sector companies earmarked for privatisation still include lucrative profit-making enterprises like Oil and Gas Development Company, Pakistan Petroleum Ltd, Pakistan State Oil, SNGPL and SSGC.
Though share prices of all these companies have declined to unrealistically low levels, these companies are performing excellently. It would be a folly, to privatise these companies until their share prices in stock markets, rebound to actual values, Khan warned.
Furthermore, 'The foreign investors would willingly take over these companies at current low values and local investors would also take a keen interest,' the experts said adding that it would be a crime to hand over these high profit-making firms to foreigners.