Sell-off of SOEs

The federal government has announced its policy decision aim of privatisation of state-owned entities. This decision has been rejected by all major political parties, who have threatened to launch a nation-wide protect campaign against privatisation. Leader of one political party has termed privatisation as “personalization”. It may be recalled that between 1991 to 2000, almost 21 state-owned enterprises were sold. Almost Rs 100 Billion are still outstanding against private companies, who have failed to clear payments pertaining to purchase of earlier 21 state-owned enterprises.

There are even reportedly, instances where well known Business Enterprises having purchased National Fiber Limited and Pak-China Fertiliser Limited have to pay the remaining amount of Rs 1.4 billion and 1.77 billion respectively to the government. Pak PVC Limited after privatisation have yet to pay Rs 342 million which is still outstanding. Similarly Sindh Alkalis Employees Management Group have yet to pay Rs 272 million. So much for the claim of certain state-owned enterprises who insist that Privatisation be affected only to employees of the organisation or employees of management group established in such organisations. Rs 56 million is outstanding in relation to a motor company privatisation, Balochistan Wheels Limited have yet to deliver Rs 769 million on account of privatisation. National Cement Private Limited has to pay Rs 431 million and Haripur Vegetable Oil Processing Industries have still to pay Rs 185 million towards earlier privatisation. Crescent Factories Vegetable Ghee Mills outstanding amount is Rs 303 million. Even Quaidabad Woollen Mills outstanding amount is Rs 77 million.

The above outstanding figures have been drawn from Business Recorder. Even PTCL privatisation has Rs 78.715 billion outstanding against the buyers due to the government’s failure to deliver some of the company’s assets. Before the Privatisation Commission of the federal government launch any major initiative aimed at further privatisation, it should ensure recovery of earlier outstanding payments.

This will give a positive signal to the present political parties who are campaigning against Privatisation. No doubt it is not the function of the government to be in business. Presently Rs 500 billion annual loss in the present state-owned enterprises has be borne by taxpayers, who in variably are not legislators, and therefore have no cause for grievance or anxiety.

There are even claims, that companies have received Rs 1.8 billion by way of unsettled amount on the guarantee of the government, but after privatisation, they have not yet returned the amount. And presently a sum of Rs 545 million is long outstanding receivable, in relation to Pak PVC Limited, Rs 915 million towards Pioneer Steels, Rs 49 million towards National Motor Limited and Rs 299.5 million towards Haripur Vegetable Oil Processing Industries. Once again these figures have been borrowed from the Article written by Wasim Iqbal and published in Business Recorder.

If recovery of these earlier Privatisation outstanding amounts are not possible and privatisation becomes unviable, it should be ensured that, those Employers or Industries who have earlier defaulted and outstanding payment are due, are not allowed either directly or indirectly to bid for further privatisation. Exercise of due diligence should be strictly conducted based not on political party supporters, friends, party in power basis who should not be obliged. It should also be ensured that once privatisation is effected, the Industry is not closed or business sold out to land developers interested in multi-storey shopping plazas etc. Bank guarantee for a reasonable amount and for a minimum period of at least five years, be submitted by these interested so as to ensure that workers are not deprived of their source of livelihood. Experience from privatisation in other countries should be taken into consideration and it be ensured that the remaining state-owned enterprises are handed over by government not by way of peanuts. One possible alterative is that the government should examine to offer a reasonable golden hand shake and payments to the workers be made before effecting privatisation. Workers be informed of cut off date, where after the scheme will no more remain in force. In this way the workers of the present state-owned enterprises would, to certain extent, ensure that their past legal dues of services and reasonable amount are received for their apprehended future unemployment, which should be safeguarded. The government should presently shelve the idea of privatisation of entities like ODGCL, National Bank of Pakistan etc, which are earning profits, so as to ensure that labour unrest, if any, is to the barest minimum and or avoided.