The sale of national assets without following set standards may lead to compromising national security at a stage, a Minute Mirror investigation has revealed.
Privatisation with undisclosed and unchecked terms can incur more losses to the country than gains as happened in the Karachi-Electric (KE) case. Abraaj Group, making headlines these days, had offered to sell the unit to Shanghai Electric, which it couldn’t, but without disclosing the agreement to the Pakistani government. Moreover, a Financial Times report on foreign funding also echoed shadowy transactions involving former premiers Nawaz Sharif and Imran Khan. The British reporter, mainly based on ECP record, alleged that Abraaj Group, private equity owned by Arif Naqvi, had paid heavy amounts to Pakistani politicians. PML-N premier and successor of Sharif, Shahid Khaqan Abbasi and later Imran Khan, as sources in Privatisation Commission disclosed, had pressurised to accelerate the KE deal to oblige Naqvi. The Election Commission of Pakistan is yet to announce a verdict on the foreign funding cases.
In this regard, former federal secretary of privatisation Irfan Ali said that this seems to be a continuity of previous governments’ practice of legislating through ordinances. The government has taken the shortcut to create a new dispensation for disposing of state-owned enterprises. “Whatever the logic that Finance Minister Miftah Ismail put forward, this is unthinkable and inconceivable for somebody like me who had fought and suffered for transparency in all such matters,” he said. It seems that the IMF has a full measure of the helplessness and timidity of Pakistani politicians and policymakers, he added. There are “no reasonable limits to their blackmail and our continuous surrender. Previously, they had forced the then government to play with national sovereignty in matters like the State Bank of Pakistan and now we are succumbing to their unreasonable pressure and agreeing to dispose of valuable and profitable assets to foreign governments,” he said. This will have very far-reaching negative consequences and would be of no benefit to the economy, the ex-bureaucrat concluded. He said that former PM Khaqan Abbasi and former privatisation minister Daniyal Aziz had forced him to allow a deal of KE but failed as he demanded the sale purchase agreement, which they couldn’t.
Former finance minister Hammad Azhar tweeted that the federal government of PDM has removed all top-notch professionals from MEPCO and GEPCO boards and appointed their political cronies in their place. This is how PMLN and PPP ruined state-owned institutions in the first place.
Instead of draining out the PSEs, the assets of those who had failed to run them should be sold. The former secretary of the Privatisation Commission has raised questions about the ordinance which ignores all laws and regulatory frameworks relating to the sale of national assets.
The federal cabinet has approved an ordinance that allows the government to bypass the existing laws abolishing regulatory checks on privatisation. The ordinance, the Inter-Governmental Commercial Transaction Ordinance 2022, also bars the superior courts from interfering in the sale of assets to foreign countries. The ordinance, in a way, safeguards the government against all existing laws. Their transnational transparency will be tarnished if procedures are compromised.
Pakistani machinery could not run its PSEs successfully. Political inductions, overstaffing and lack of a proper mechanism to run them on the corporate model caused undue losses. At present, there are only three options; either to reform them or continue to bear the losses or sell them out. The last one, as the incumbent government prefers, is viable comparatively.
The proponents of privatisation assert that since the state enterprises have become parasitic, there was no need to keep them as a permanent burden on the economy.
However, the opponents of it say that the experience of this notorious move has further plagued the country. Instead of privatizing the loss-showing entities, profit-oriented organizations like PTCL had been drained for pennies in the Gen Musharraf regime.
Dr MA Gujjar, an economist, was of the view that the oil and gas companies and state-owned power plants may be sold to the United Arab Emirates all for up to 2.5 billion dollars. The conditions of the International Monetary Fund that Pakistan must arrange $4 billion from friendly countries is shocking. The empowering of the federal government to issue binding instructions to the provinces to hand over land to foreign states cannot be digested. If the government design is materialized under the new arrangement, the provincial resources would be drained for the provision of utility services and the construction of roads for ‘investors’. How the price of these PSEs will be fixed, he questioned. The government should present details of all the privatised assets so far, who was responsible for their failure and whether the targets of previous privatisation were achieved or not. The nation must be updated first before further befooling it.
Dr. Munawar Sabir, an analyst, said that Pakistan now is not undergoing any war or terrorism-like situation. Things are being artificially managed by international players through their frontmen working here. He said that Shuaib Muhammad, the finance minister of Gen Ayub Khan, was an American agent as CIA documents revealed later. Qudratullah Shahab also disclosed it. His snail-paced development in then East Pakistan developed sentiments of rebellion in Bengalis. The west has three target areas in Pakistan: the nukes, the CPEC and the recognition of Israel. The IMF has since long been pushing us to do as desired. The domestic enemies and foreign agents devastated the economy and are nearing their targets. Why PM didn’t go on a China tour? Why Pakistan couldn’t talk about its interests? The answer is their “men” in power corridors. The USSR was a nuclear giant but collapsed as its economy had failed. Pakistan’s economic muscle, he said, is not twisted but broken.
Dr. Akhtar Hasan Khan, in his research report, noted that due to political interference and overstaffing, the efficiency of the public sector units had reduced. One purpose of corporate privatisation is said to retire the national debt. He asserted that without avoiding crony capitalism, as happened in Chile and Argentina, the PSEs were privatized to political cronies or their front men at throwaway prices. The second imperative of privatisation is timing. He said that privatisation after 9/11 2001 was not a good time.
Khan further said that the Asian Development Bank Report 1998 indicates that only 22% of the prime privatized units were performing better than in the pre-privatized period and 34% proved worse than before. The privatized PSEs included Dandot Cement, National Cement, Pak PVC, Pak China Fertilizer, Karachi Pipe Mills, Indus Steel Pipe and many others. The analysis of the first tide of privatisation as Khan noted has shown that it had badly failed to achieve its goals.
The sale of KAPCO made WAPDA bankrupt and it had to hire Independent Power Plants (IPPs) to purchase electricity at very high rates. The nation has to suffer for decades. The present design of the PMLN government, as Hammad Azhar also pointed out, to stuff BODs of DISCOS with political people replacing professionals would be another preparation to sell them thus further intensifying the looming energy crisis.
It is to be recalled that the second tide of privatisation was from July 2001 to October 2002. It was again imposed by the IMF as a financing facility under the name of the poverty reduction and growth programme. Pak Saudi Fertilizer, also a profitable plant, was sold out to Fauji Foundation. He writes that in the sale of UBL to Abu Dhabi and Bestway Group, the Government of Pakistan poured Rs30 billion into the bank to make it privatisable. Later, it was sold for Rs12 billion only. Joseph Stiglitz, an American Nobel Laureate in his book on globalization, pointed out that the fast pace of privatisation in Russia at the behest of the IMF had rapidly destroyed its economy.
The current sweeping tides of privatisation in a non-transparent manner are detrimental to national interests. The need is to block them, even at the cost of bankruptcy. The privatisation of Pakistan State Oil and OGDCL may prove state blunders. If we continue taking dictation from the IMF, the next demand may be to privatise the Mangla and Tarbela dams, both sources of irrigated water and low-priced electricity.
Pakistan Steel, Roosevelt Hotel USA, PIA, OGDC and many more will be sold out at throw-away prices. The rapid privatisation of these national assets to foreign countries that have also developed ties with Israel would be fatal for the nuclear state’s safety. There should instead be legislation to bar the governments to succumb to loan agencies’ pressure to sell these assets.
