According to a Business Recorder exclusive, state-owned entities engaged in property disputes are a major impediment to the success of the government's privatisation plan. Faisalabad Electric Supply Corporation (Fesco), Pakistan Steel Mills (PSM) as well as Railways, identified for sale under the government's privatisation plan submitted to the International Monetary Fund under the 6.64 billion dollar Extended Fund Facility are all embroiled in property disputes.
Over 100 Fesco properties valued at 10.7 billion rupees have yet to be mutated in its favour and the reason given is lack of adequate resources for the transfer of titles. PSM handed over 930 acres of undeveloped land to National Industrial Parks Management and Development Company (NIP) to set up an industrial park, however, in violation of the agreement NIP leased the land to M/s Yamaha and M/s MD Coil Centre. Pakistan Railways is engaged in recovering land from encroachers/land mafia and at present over 875 acres of land remains in possession of these encroachers in Sukkur division. These examples epitomise the power of the land mafia in this country and the inability of the management of these entities to resolve these issues - management that by dint of operating within its legal rights should, but clearly does not, have relatively easier recourse to justice relative to the land mafia.
What is unfortunate is that the government appears to have learned no lessons from the 26 percent sale of Pakistan Telecommunication Company Limited (PTCL) shares to Etisalat Telecommunications. To-date 800 million dollars remain unpaid by Etisalat because successive governments have been unable to mutate all the properties to PTCL, as originally agreed. As per the 2004 agreement, the government was to transfer 3,248 properties to PTCL and to-date 3,214 properties have been transferred with 34 properties yet to be transferred with an estimated value of 92 million dollars - a shortfall that accounts for Etisalat's refusal to pay the balance of 800 million dollars even 11 years after the sale.
Etisalat is on a legally sound wicket and Pakistani politicians, including former President Asif Ali Zardari and Finance Minister Ishaq Dar, with known close ties within the power corridors of the United Arab Emirates, have not been able to convince Etisalat to subtract the value of the 35 properties and pay the balance of the amount, ie, 708 million dollars. Significantly this is no longer being included in the revenue base of the country for the last three budgets - an amount that during the PPP-led coalition government was included as government non-tax revenue. In 2012-13 budget documents, profits from PTCL, including the 800 million dollars was noted under non-tax revenue at 75 billion rupees in 2011-12, an amount that was not realised, and 79 billion rupees in 2012-13 - the higher amount indicating the rupee erosion. This was taken out of the budget during the tenure of the current government reflecting the acknowledgement of its inability to resolve the outstanding issue.
One would assume that a lesson learned from PTCL would be for the government not to include those properties that the entity targeted for privatisation does not have in its possession as its asset. In addition, it is important to include in the sale agreement that the land is provincial land and was provided for a specific purpose thus any attempt by the private purchaser to use the land for a purpose other than what it was originally leased for would legally allow the provincial government to demand that the land be reverted to it.