Federal Minister for Privatization, Daniyal Aziz Wednesday said that sick public sector enterprises are consuming over Rs 700 billion annually, which are operated through borrowing and as a result the private sector is deprived of the credit facility for industrial development as well as job creation opportunities.
He said this while briefing the Senate Standing Committee on Privatization and Statistic that met here under the chairmanship of Senator Mohsin Aziz to discuss the working performance of the Ministry of Privatization and details of the privatization of last four years. The minister said that the amount spent on these enterprises could be spent on the social sector development and poverty alleviation for rapid socio-economic uplift of the country.
Aziz said that Pakistan Peoples Party, the main opposition party in the Parliament, kept on making huge hue and cry whenever the government in past four years tried to start privatization process of Pakistan International Airlines. He said that privatization of sick public sector entities will provide significant financial space to the government to allocate funds for neglected sectors, adding that "time has come when we must have to serve the interests of 210 million people of Pakistan, instead of serving interests of a few people having vested interest."
The chairman of the committee directed Ministry of Privatization to submit report on the discount rate provided during the privatization of United Bank Limited (UBL) and Habib Bank Limited (HBL), besides preparing a proper policy for privatization in order to improve the working capacities of state-owned enterprises.
The panel was informed by the Director General Privatization Commission (PC) Mukhtar Waris that all these enterprises were privatized at 7% discount rate. The panel was informed that total borrowing and accumulate losses of Pakistan Steel Mills (PSM) and Pakistan International Airlines Company limited (PIACL) were stood at Rs 176.6 billion and Rs 316 billion respectively.
The DG PC apprised the meeting that annual losses of ailing public sector enterprises have been swelled to an unprecedented level and it was increasing the importance of the restructuring and private sector participation to ease pressure on the fiscal deficit.
He informed that the government had extended bailout package to PSM amounting to Rs 76 billion including employees'' salaries as of August 31, 2017; however, total debt and accumulated losses of PSM stood at Rs 99.4 billion and Rs 176.6 billion as on June 30, 2017.
The committee was further informed that the government had also provided guarantees amounting to Rs 161.5 billion to PIACL as on June 30, 2017, whereas total borrowing and accumulated losses of the PIACL amount to Rs 186.5 billion up to December 31, 2016.
The DG PC told the committee that almost 172 transactions were completed pre-2013 and total privatization raised around Rs 648.6 billion. Giving the break-up, he said that in first term of Pakistan Muslim League (PML-N) government from 1991-1993, 64 public sector entities were privatized which generated Rs 12 billion, late Benazir Bhutto government from 1993-1996 privatized 28 entities for Rs 45 billion and PML-N government in second term 1997-1999 privatized 9 organizations for Rs 2 billion. He added that from 1999-2002 Pervez Musharraf-led setup sold 27 organizations for Rs 38 billions and from 2002-2007 Pakistan Muslim League (PML-Q) government sold 38 entities for Rs 377 billions.
It was informed that total five transaction were completed during last four years including privatization of United Bank Limited, Pakistan Petroleum Limited, Allied Bank limited, Habib Bank limited and National Power Construction Company.
The transaction completed during last four years raised gross proceeds of Rs.172.87 billion including US$ 1.1 billion in foreign exchange component. The committee was informed that under current privatization program, the Cabinet Committee on Privatization had approved the privatization of 70 loss making public sector entities and the total 42 entities included in the early implementation of privatization.
The Small and Medium Enterprises Bank, Mari Petroleum and PSM were on the ongoing transaction whereas transaction structure of PSM has been finalized by the PC board and liability settlement plan in consultation with NBP, SSGC, PSM and Ministry of Industries and Production is being finalized.
Discussing an other agenda item regarding reassessment of 1-2 percent census blocks, the secretary statistic told the committee that reassessment was not possible at yet, however the representative of the provincial governments were briefed about the scanning of farms, which were appreciated by them.
Federal Minister for Statistic Kamran Michael said that only Sindh has expressed some reservations on national census while other provinces are satisfied with the outcome. He added that Sindh''s objections are related to Karachi''s population wherein past 19 years only 7 rural areas have been included in the urban areas.
Chief Consultant on Census, Asif Bajwa informed the panel that Sindh''s objections to census are based on a World Bank publication of 2007 according to which in 2030 Karachi''s population will reach 25 million.
He said that the general elections 2018 cannot be held on the basis of final results of the 2017 census, adding if the government insists on holding an election in light of the final results of the recently conducted census, they [elections] will have to be delayed.
Bajwa told the committee that the final results will be released by the end of April 2018, following which the Election Commission of Pakistan will require four months for delimitation of constituencies. In order to hold the elections on time, old census data will have to be used.