SOCIO-POLITICAL RISKS TO PRIVATISATION IN BALOCHISTAN
May 3 - 16, 2010
The rewards from privatisation are not big enough to compensate for all the associated socio-political risks for pursuing privatisation policy in Balochistan. The industrialisation in private sector in the province has largely been serving the interests of influential business tycoons rather benefiting the people of the province. This is because of the fact that Balochistan is not so economically developed where the private sector could play an important role to boost industrialisation. In other words, privatisation policy has ever gone against the interests of local masses.
Realistically speaking, industrialisation in private sector has no scope in Balochistan. The industrialists in the past got all the incentives from the government including tax holiday, soft loans, exemption from custom duty etc. but as soon as the incentives were abolished, they took away every thing including machinery declaring the industries sick. It is ironical that industrial units got sick making the owners healthier financially. The example of sick units in Lasbela district may be cited in this regard. When the federal government refused to extend the tax holiday and other incentives, they simply closed down their factories. Resultantly, the shifting of the Industrial base from Uthal to Hub near Karachi plagued industrialization and served the vested interests only.
The irony of fate with many enterprises in public sector has been that they continued as monopolies, which prevented comparative performance. It is however a fact that Industrialization has scope only in public sector at least in Balochistan. There is a high need to learn from the previous experience and adopt diagnosis-to-prognosis approach for industrial development in public sector. The government, it is suggested, should establish industrial units and run them for at least 10 years making it profitable. Then local investors must be invited to buy them to sustain and accelerate the process of industrialization in the province.
It is the reality that industrialisation process was put on track in the province in 1980 when Pak-Iran textile mills at Quetta and Uthal were established. The two Pak-Iran textile mills laid the industrial foundation of the least developed province. The mills were closed due to the wrong policies of corrupt and inefficient managers. The mills showed losses just because of the corruption and involvement of vested interests and thus, the industrialization was plagued when it was at its infancy in Balochistan.
Lasbela textile mill is a project of Iran Pakistan Industries (Pvt) Limited (IPI) situated at Uthal, District Lasbela, Balochistan. The machinery is part of fully integrated units of 50,000 spindles and 1,100 looms with complete dyeing and finishing facilities. The plant was set up in 1976 and it started production in January 1980 but was closed down in 1983. The closure of textile mill at Uthal amply reveals a shocking story of injustice done to the people of this most backward province. It reveals how callously the public exchequer was plundered: how petty personal interests did override national interests and how the politico- bureaucratic allies did harmonize their anti-people agenda here.
The mill was closed down when it had reached the production stage. Iran did her best to keep it running, even offered to buy its production on payment in advance, but the corrupt management turned a blind eye to the benefits the local people could enjoy from the project and closed down it abruptly. Thousands of people, mostly labourers, lost their jobs to the immense disservice to the province. The machinery installed at these textile mills costing millions of rupees and the valuable industrial infrastructure built was sacrificed at the altar of vested interests and the project could not bring any good for the people of the province.
The entire episode of installation of textile mill served only the petty personal interests of the politico-bureaucratic agents of the federal government during eighties.
The vested interests were involved in closing down the two Pak-Iran textile mills in Balochistan. Those who built empires of corruption at the cost of the legitimate interests of this backward province must be held accountable and punished, but what was the guilt of thousands of workers and professionals from this province who lost their jobs after closure of Bolan and Lasbela textile mills?
The textile mill at Uthal may not be categorized as sick unit. It was closed mainly to serve the vested interests. The imported machinery installed at the mill has been of no avail since its closure. Now Balochistan is producing finest quality of cotton. This is the right time to re-open closed textile mill sharing the boon of textile boom with the least developed province. The closed mill has tremendous potential in development and employment sectors in Balochistan.
The textile mill with all its machinery, physical infrastructure and industrial land was established to initiate industrialization process, create thousands of jobs and combat backwardness in the province. In three working shifts in the mill, thousands of workers can get jobs.
Under former government of Prime Minister Shaukat Aziz, the Privatisation Commission (PC) had received the highest bid of Rs156 million for the sale of assets, plant, machinery and equipment of Lasbela Textile Mills (LTM). PC Board had made recommendations for its approval to the Cabinet Committee on Privatisation (CCoP).
Privatisation of LTM served the interests of textile Mafia. The mill was established with the financial assistance from government of Iran in public sector.
The officials of Ministry of Production and Pakistan Industrial Development Corporation (PIDC) ruthlessly plundered the mill sabotaging the industrialization process in the province. The closed mill's assets worth millions of rupees had also attracted the textile tycoons of Faisalabad and they developed links with former top notches of PC. Resultantly, few years ago, some moves were made by PC to auction the machinery of the closed textile mills. The textile tycoons had planned to buy the textile machinery at nominal price by paying some amount to the corrupt functionaries of PC. They however could not succeed in materializing their plans.
The independent experts are of the view that at initial stage, the mill can be run on 'no profit no loss basis'. There are a host of departments in public sector, which are constantly showing losses but are being run by the government in the public interest. Though these departments are burden on national economy, yet public service justification is deemed logical. The government may borrow loans from the domestic or foreign donor agencies to revive and put the mill on the track of productivity.