Ten-day workers strike ended after assurances that their interest would be safeguard

June 06 - 12, 2005

The privatisation programme last week confronted a major setback when it was compelled to put long awaited and much over due auction of Pakistan Telecommunication Company Limited (PTCL) on hold.

The postponement came after Pakistan's government marathon efforts to end a 10-day stand-off with 55,000 workers at Pakistan's state-run telecom firm who were on strike against privatisation planned for June 10, 2005.

Nine different trade unions of Pakistan Telecommunication Company Limited (PTCL), the largest telecom company in Pakistan, on May 26 told employees to stop work to resist privatisation and press for several other demands.

Telecom Minister, Owais Leghari had to hurry to hold talks with Prime Minister Shaukat Aziz in a bid to resolve the situation. President of PTCL Employees Union Zia-ud-Din said 55,000 employees were on strike, while company officials said a skeleton operation is running with 6,000 workers but customer services such as inquiries and complaints were paralysed.

"We want the cancellation of privatisation forthwith. The management had never taken us into confidence about the sale of the company, a most profitable one," said Zia-ud-Din. The unions were also pressing for confirmation of 4,800 daily-wage workers and provision of job quotas for workers' children, he said.

"We are observing restraint till June 6 and afterwards we will evolve a strategy if privatisation is not stopped," Zia-ud-Din said.

Zia also said: "we are also concerned over the potential price of the company, it should have been double what government is demanding," he said. He said the government intended to sell 26 percent of shares in PTCL at a price of 2.5 billion dollars, while it could fetch over five billion dollars.

Pakistan's Privatisation Commission on May 26 announced that the bidding for a 26 percent stake in PTCL will begin on June 10 and that the deal would be completed by the end of next month.

The commission has already short-listed foreign telecom conglomerates as potential buyers including Singapore Telecom (SingTel), Emirates Telecommunications Corp (Etisalat), Telekom Malaysia, MTC of Kuwait, Saudi Oger, Turkcell, China Mobile Communication Corp and Saudi Telecommunications Company.

A statement of the government after the conclusion of the worker-management dialogue said "the government has agreed to delay the privatisation of the PTCL and the Privatisation Commission will review the workers concerns and will decide in the best interest of the nation, workers and PTCL."

The government said after the signing of the agreement the workers had agreed to end their strike after government had assurances that their interest would be safeguard after its privatisation. It further said that the Cabinet Committee on privatisation would take employees into confidence before finalising a reference price for PTCL.

Since its (PTCL) launch in the early 1990, Pakistan's bid to privatize state-owned enterprises has proceeded in fits and starts. Despite privatization being a mantra for reducing the budget deficit and improving efficiency, until 2003 the country had only managed a couple of major deals though successive government had sold well over 100 state-owned units to private entrepreneurs in the past decade.

The issue of global depository receipts for 9.8 percent of the state-owned telecom monopoly PTCL was the first hallmark deal in 1992 that followed by the sale of another 2 percent stake in the local market in 1994, raising about 900 million dollars.

Critics said that was the high time to sell the company as it was being valued at around 12 billion dollars in view of the global boom in the telecom sector.

A raft of negative factors had been hobbling the commission at that time, however. The absence of a legal framework defining privatization's limits, some questionable deals, frequent changes of government and the confusion over policy all contributed to the drift.

A deteriorating law and order situation as well as strong resistance from unions and politicians only made matter worse.

International Power, for instance, had to fight a legal battle for over six years to establish the legitimacy of its deal to buy into Kot Addu Power. Several leaders of the Commission faced lawsuits and charges of taking kickbacks. Widespread pre-privatisation layoffs at overstaffed organization cost former prime ministers Nawaz Sharif and Benazir Bhutto much of their earlier popularity. But with most of the spadework having been done by the government so these two former premiers, President Pervez Musharraf was able to move things along after he seized power.

In 2000, the government promulgated an ordinance legitimizing the Privatisation Commission and defining its power to assist the government in formulating and implementing its divestment policy.

Now it would be quite a task for the privatisation authorities to give a concrete date for PTCL privatisation due to mounting pressure of union, who are determined to pursue their demand unless they are met on ground.

According to some reports the commission officials have vowed to bring the telecom giant under the hammer by June 30 as they have successfully pursued the employees but it could be a wishful thinking as workers are equally determined to not let go their core demands unmet.

With a long list of public sector organizations to be privatized, it would be uphill challenge for the commission also to sell Pakistan Steel, Pakistan International Airlines, and other local giants, where unions have stronger presence and could cripple the government plan. This is simply a setback.