Waqar Ahmed Khan, the Privatisation Minister, stated while on a visit to the United Kingdom that Pakistan was nearly ready to launch a privatisation programme aimed at bringing foreign management expertise and tap international markets to turn around its flagging state owned entities (SOEs). He needs to clarify this statement on several counts.
First, the use of the word 'nearly' needs to be explained. Given that the SOEs losses are escalating exponentially attributed to the trend by the PPP-led government to appoint the senior-most management of these entities based on party/personal loyalty to its leadership, (examples include former Ogra Chairman, Chairman of National Insurance Corporation, former Chairman Pakistan Steel Mills) as well as using them as employment exchanges for the jiyalas 'nearly' may well be defined by sceptics as reaching a state where the SOE is simply not viable for sale.
There appears to be no effort on the part of the government to appoint on merit or indeed to begin to rationalise its staff strength. Secondly and equally importantly Waqar Ahmed Khan would do well to define what he means by the privatisation programme and whether his definition is in synch with that of the party he now represents.
The PPP under the chairpersonship of Benazir Bhutto had abandoned the pro-nationalisation policy in line with the changing economic realities of the 1980s. However she continued to defend policies that were not compatible with privatisation. These included using the SOEs as employment exchanges - a policy that visibly continues to this day. President Zardari has, in several speeches, supported public-private partnerships wherein the dearth of public sector capital, (which would eliminate the need to inject 300 billion rupees plus burdensome bail-out budgetary package to the SOEs each year) may be replaced by private sector capital.
However for this to happen the government would first have to make these ventures profitable and that is only possible if political and bureaucratic interference in the process ends. At present there is no evidence to suggest that the government has abandoned its policy of nepotism in appointments in either management or the workforce of SOEs. Thus for Waqar Ahmed Khan to state that Pakistan is nearly ready to launch the privatisation programme requires urgent clarification if he and his cabinet colleagues are serious about such a launch.
Third the Privatisation Minister stated that the privatisation programme would tap foreign management expertise. This too is inexplicable. The SOEs are commercial enterprises, and do not entail rocket engineering that is understood by few, and there are adequate human resources available within the country's private sector to turn these monoliths around. But again the government must commit to desist from political and bureaucratic meddling in their operational decisions and for this it is critical for these SOEs to be taken out of the control of ministries.
And finally the Minister must be aware of the domestic and international economic climate that militates against the possibility of the inflow of foreign investment in support of our SOEs. In this context it is pertinent to note that when Etisalat made the offer to purchase Pakistan Telecommunication Corporation Limited five years ago it surprised everyone as the offer was more than generous and there was a wide differential in the offer between the highest and the second highest bidder.
However 800 million dollars have yet to be released by Etisalat to the government. The reason is the failure of the federal government to give title to the property that was bought by Etisalat. The provincial governments are rightly challenging the Centre's right to pocket the money for properties that they had allocated to T and T specifically and not to the federal government in perpetuity.
If the T and T became non-functional after the sale to Etisalat the money from these properties should by right be given to the provinces. There is thus a need for the government to first resolve all pending issues with the provinces and ensure that the 800 million dollars is released by Etisalat.
That would be a step in the right direction and send the message to domestic and international management experts that the government's offer is viable indeed otherwise there is a real danger that the government would attract the unscrupulous who may be lured with large pay packages but who would be unable to deliver given the existing state of affairs.
It is also hoped that the federal government would draw valuable lessons from the past when sitting governments were accused of taking commissions and selling the family silver too cheaply. It is critical therefore that a committee with representation from all political parties as well as from different private sectors including watchdogs like the media and NGOs be part of the bid vetting and approval process.