The government is considering a major policy shift in its restructuring plans for eight state owned enterprises (SOEs) after acknowledging that restructuring in the public sector entities is not viable, a privatisation official said on Monday in the meeting of National Assembly Standing Committee on Privatisation.
The official claimed that it has been acknowledged at different government fora that a restructuring plan in the public sector is bound to fail and a strategy shift towards outright sale of SOEs is required. The official further said that Pakistan Steel Mills (PSM) had forwarded three plans for its revival but these plans were simply not implemented. As a last resort, Prime Minister Yousaf Raza Gilani has convened a cabinet meeting this week to review the progress made in restructuring the PSM. Some major decision is expected in the meeting, the official informed the committee.
Former Finance Minister Shaukat Tareen had presented the policy of privatisation of running the SOEs through public-private partnership in 2009. The standing committee decided that a meeting, to be held in the first week of January next year, would attempt to determine the dimensions of future privatisation policy. One of the financial advisors to Privatisation opined that the decision to suspend privatisation of Islamabad Electric Supply Corporation (IESCO), when it witnessed its highest profit ever, around Rs 1 billion, was not appropriate. IESCO is currently showing financial loss of around Rs 600 million.
About privatisation of Pakistan Railways (PR), the Privatisation Commission official said that the process of dividing PR into different sub-entities for the sake of privatisation was underway. Service and Manufacturing of Railways would be under limited liability companies. This transaction would be completed within a stipulated period of 6 to 8 months. However, the assets of PR would not be for sale.
The committee members exchanged views on factors which led to financial losses in PR. The officials of PC implicated the ''road transport mafia'', and accused the Planning Division of failing to come up with a national transport policy during the last three years. This, it was argued, was a major blow to the financial health of PR.
Chairman of the Committee, Sohail Mansoor, recommended to the government to divert supply under the Afghan Transit Trade from road transport to railways. He further suggested that rail freight would become important if the government gave India MFN status. As Indian ports are congested, it is high time that Pakistan offers shipping facilities to it, and PR can play an important role in this regard, he added.
On the conclusion of the session, PC Secretary Liaquat Ali told Business Recorder that the target of raising Rs 70 billion through privatisation, as indicated in the budget documents for fiscal year 2011-12 was a challenging task. The government did not achieve $500 million by launching GDR of OGDC. In addition, the negotiation with Etislat, UAE telecom company, has been slow. Several meetings between PTCL management, provincial administrations and Privatisation Commission were held on transferring properties to PTCL, he said. Another meeting was expected in a couple of days, he added.