The failed Bid of privatisation in Pakistan

The failed Bid of privatisation in Pakistan

ISLAMABAD - Privatization is commonly known as transfer of the burden of production of goods or services to the private sector; for the efficient conduct of businesses. The pioneers of the idea were Emanuel Saves and Robert Pool founders of the Reason Foundation.

However, the concept of privatization has got importance during the last quarter of the 20th century, when the Conservative Party of United Kingdom won the election of 1979 on the agenda of economic reforms and Margaret Thatcher became the British Prime Minister. She successfully implemented this idea and achieved great economic applause. Later, the concept became increasingly popular throughout the globe, and especially in developing capitalist democratic countries.

The rationales behind the notion of privatization have great importance under the modern structure of governance. Firstly, the “white elephant” in the shape of loss-making Public Sector Enterprises (PSE) are causing billions of Rupees annually which otherwise could be saved and instead spent on public welfare.

Secondly, the chief function of the government is to run the state affairs and it should focus on facilitating the businesses by creating a favorable environment instead of running businesses itself. The core function of the government is to provide better governance not to do good business. Thirdly, privatization of publicly owned units/bodies is the hypothetical increase in productivities resulting from private ownership driven by a focus on profit maximization.

Prima facie, the idea of privatization in Pakistan has strong roots if we look at the ground realities. Pakistan economy has been suffering a loss of billions of rupees annually owing to the ill performance of state entities. Pakistan Steel Mill (PSM) alone has suffered a loss of more than three hundred billion from 2006-18. The story of Pakistan International Airline (PIA) is even more pathetic.

All previous efforts to manage the loss to national exchequer have critically failed. The prevailing governance structure has failed to supply a functional system. In light of all these considerations, optimistically speaking we have only one pragmatic solution left; the privatization of the poorly performed institutions/bodies.

The Pakistan Muslim League Nawaz (PML-N) which is considered to be the pioneer of the idea of privatization in Pakistan. During the election campaign of 2013 and the election manifesto of the PML-N has made the promise of privatization of the loss making state entities to the nation. Five years on it seems that the party has completely failed to implement its pledge. Despite the fact, the party has enjoyed clear majority in the parliament throughout its tenure. They couldn’t enforce the prescribe undertaking. Instead of accepting the failure, the rumors mill is speeding high.

As shifting the burden of failures has gained the status of norm in our country. If we ask for the reason of this failure too the probable answer will be legal complications, politics of protests, victimization, Panama papers and the lack of consensus inside the parliament over the issue. But, our ruling politicians will never accept their own lack of competency to manage the schema. If we look at the business of privatization, there are following convincing explanations:

The very first thing to observe is the shortcomings of the ministry of privatization. The minister for privatization himself was unsuitable person for this sensitive portfolio. He has not only lack command over the issue, but was more loyal to his political master than the master himself. He has leftover all his time to defend the un-defendable. He neither tried to conduct any serious debate over the matter nor make it as a top priority.

Secondly, the government was inadequately prepared to lead the program of privatization. At many instances, they appeared ill-prepared for the agenda. Throughout the tenure, the political will to implement the promised privatization was looking missed. Whenever any bailment is pending from an international body/institution, they pick the agenda again to catch the cash and dump it afterwards. This off-again on-again mantra has damage the legitimacy of the process. To more accurate, the governments seem to dodge the international institution in the name of reforms.

Thirdly, the PML-N government has appeared to shift the blame of failure to the opposition. An argument stated by the treasury benches that; the conducive environment was not available to implement the idea. The role of opponent was stubborn and they never appreciate the government efforts. But they maybe forget the very spirit of the word opposition. Nowhere in the world can a government be expected without dissent. This is the essence of democracy to deliver in the presence of all odds. In this front, the PML-N has faced an unadorned defeat.

Albeit a mechanism has provided by law for the smooth dealing of the privatization process, the same has never opted with its true spirit. The constitution of Pakistan neither explicitly deals with the question of privatization nor does bar it. Article 153 and 154 of the constitution of Pakistan in shape of Council of Common Interest (hereinafter referred as CCI) has implicitly provided an alternative mechanism to be followed for privatization of a public entity. Besides this, following necessary articles 172(2) and 173(1) has never been consulted.

To insert the process of privatization, there is a procedure to be followed. The first prerequisite is to choose an ill perform institution/company. This assignment is carried out jointly by the planning commission and the concerned ministry (under the entity operates). The planning commission submits a summary of the proposed transaction to its governing Board.

Subsequently, after its endorsement by the Board, submit it to the cabinet committee for consideration, and for the final approval of it, will be submitted to the federal Cabinet. In rare cases, the Cabinet Committee or the federal Cabinet itself directed the privatization commission for privatization of an entity, which they deemed fit for. In their bid, they preferred the least acceptable method.

In sum, the PML-N government during its present tenure couldn’t accomplish any substantial institutional development. Its claim to strengthen the institutions once again shows faint. Even this time the government has completed its constitutional term of five years. It has nothing sizeable in its cup, except the conclusion of their predecessor initiative; CPEC and the last-minute joint venture of FATA reforms.

The Panama papers and subsequent disqualification of PML-N superman Nawaz Sharif has considerably demoralized the party. As the general election is only few days away, Nawaz is playing the card of victimization, but in reality he is rolling more mess around the party politics.

BY: Asad Ameer Chaudhary; Lahore based lawyer and can be reached at