Lack of coordination between
various ministries has been the biggest hurdle in smooth process of privatization
From Shamim Ahmed
Sep 06, 1999
Despite all the tall claims made by the Privatization Commission from
time to time, the fact remains that the performance of the commission during the last 30
months has been painfully slow. The biggest obstacle has been the lack of coordination
between various ministries and difference in the perceptions of the commission and the
concerned ministries over the privatization of various units.
According to the Privatization Commission, those units should be
privatized first which are performing well and showing profits while restructuring of
those state owned units should proceed their privatization which were in bad shape and
The Chairman of Privatization Commission Kh. Muhammad Asif is of view
that through this method alone we could get the good price of units offered for sale. This
view which is also supported by the IMF is not shared by the ministries concerned. Kh.
Asif, a close aide of the Prime Minister, strongly feels that the national interest would
be served by selling 30 to 40 per cent of government investment in the oil & gas
sector and thereby paying off most expensive debt of about $10 billion. He was able to
convince the Prime Minister for the usefulness of his plan of action and was extremely
happy when, on his suggestion, Prime Minister agreed to become Chairman of the
Privatization Board, a few months back. This, he thought, would discourage the bureaucrats
and also some ministers who were opposing privatization of PTCL & Oil Sectors.
According to sources in the Privatization Commission, IMF has also
suggested that Government should first start the restructuring, modernization of badly
performing units, make them profitable and then arrange their privatization against a good
return. There is strong section in the government, besides the concerned ministries, who
are opposed to this approach. Some of them rightly question the wisdom of this approach
which means that the government should first invest billion of rupees on sick units,
introduce modern technologies, improve the management and make them profitable before
selling them to private sector. They are of the opinion that profit making organizations
should not be privatized. They are also opposing the privatization of UBL and HBL now when
after sinking over Rs. 19 billion of state money these two banks have been turned into
profit making units. For the same reason they are opposing the privatization of PTCL, OGDC
and other units which are earning billion of rupees annually.
Insiders say that Khawaja Asif was given the task by the Prime Minister
about two months ago to urgently plan the disinvestment of 30 per cent government
shareholding in the oil and gas sector. This was intended to get ride of the most
expensive foreign loan amounting to $ 10 billion which had been acquired on high mark-up.
If this $10 billion loan is paid off, it is said, the government would be free of seeking
compulsory loans to pay off its old loans. Since the oil and gas sector has great
potential for offering $ 8 to 10 billion, the government decided to privatize it.
Asif then managed to get all the relevant details about the oil and gas
sector despite the bureaucratic opposition. In his report to the Prime Minister he said
that all international players in the oil and gas sector were already present in the
country and were very much interested in purchasing the government shareholding. These
major players were the foreign oil companies which had expressed their willingness to take
part in the bidding process as soon as all the formalities were completed.
While Khawaja Asif believes that the solution to all the current
serious economic issues lies in the disinvestment of the government's shareholding in oil
and gas sectors, the minister for petroleum reportedly insists that the privatization
commission which could not sell small lodges and hotels, has no capacity and wisdom to
disinvest the mighty oil and gas sector. He is also said to have held the belief that the
privatization, done so far, is confined only to ghee and cement sectors which shows the
performance of the commission during the last two-and-a-half years. He reportedly claims
that whatever industry has been privatized, its owner ultimately made "cartels"
and thus created problems for the people. In this regard the ghee and cement manufacturers
are often mentioned who formed cartels after having purchased their units from the
During the Peoples Party government, former president Farooq Leghari
had opposed the privatization of the oil and gas sector. He used all his influence to stop
the privatization of Oil and Gas Development Corporation (OGDC), although former minister
for petroleum Anwar Saifullah Khan was all for its disinvestment.
All efforts of the Privatization Commission to disinvest government
shareholding in this sector are said to have been scuttled by them reportedly with the
support of the minister for petroleum and natural resources.
Khawaja Muhammad Asif has not been able to privatize even 10 per cent
of the profitable and viable state-owned industrial units during the second PML
government. He has also been complaining that four of the transactions which are almost
ready and include Pakistan Telecommunication Company Limited (PTCL), Karachi Electricity
Supply Corporation (KESC), Habib Bank Limited and United Bank Limited are being opposed by
the relevant ministries. He had felt relieved when Sartaj Aziz was given a new assignment
as he had been allegedly opposing the privatization of many state enterprises. But today
he is equally unhappy and circles close to him claim that he has already conveyed his
feelings to the prime minister.
Many people fear that there will be kickback and commissions in the
privatization of the oil and gas sector. They argue that since it is the only profitable
sector and could attract foreign investment, people sitting in the ministries and those in
politics will scramble for having their share in the cake.
Now the question is whether the prime minister and his team are serious
about a meaningful privatization specially that of the oil and gas sector to secure the
much needed $ 10 billion to get rid of country's most expensive debt. Apparently one does
not see any seriousness on the part of the government for accelerating the privatization