Former Sindh governor alleges Ishaq Dar for reversing privatisation of loss-making SOEs

Pakistan Muslim League-Nawaz leader and former governor of Sindh Muhammad Zubair said that the privatisation process for three state-owned entities - Pakistan International Airlines (PIA), Pakistan Steel Mills (PSM), and Faisalabad Electric Supply Company (FESCO) - was reversed, alleging the then Finance Minister Ishaq Dar of ‘deliberately’ halting the process despite having received bids.

While talking to a private television channel, Muhammad Zubair claimed that the decision to privatise these entities was made in October 2015, and bids were received for FESCO, the power distribution company. 

He said that the PML-N-led government reached the last stage in the process of PIA’s privatisation, but unfortunately the process was halted.

According to Zubair, the board, which halted the process, was headed by former finance minister, Ishaq Dar. “Despite receiving bids, Dar halted the privatisation process,” he alleged.

He alleged that Dar played a role in the handover of PSM to the Sindh government, citing political obstacles in the privatisation efforts.

“There is no other way than privatisation of loss-making entities,” Zubair said, adding that the people of Pakistan were bearing billions in losses of the state-owned enterprises (SOEs).

He pointed out that former chief justice Iftikhar Chaudhry halted the privatisation of Pakistan Steel Mills for seven years, which caused a huge loss to the national exchequer and the decision portrayed Pakistan’s negative image before global investors.

“Foreign companies, including ones from China, had expressed interest in PSM, and its privatisation would have benefitted Pakistan,” he said.

Zubair said that PML-N had constituted the best privatisation board, which also took important decisions. It was in our manifesto that up to 70% of institutions should be privatised.

He pointed out three big loss-making companies - PIA, Pakistan Steel Mills, and FESCO - which, according to him, were causing financial problems to the country.

It is pertinent to mention here that Pakistan has a total of 212 state-owned entities, 85 out of which are commercial entities. A recent report published by the World Bank has named Pakistan’s SOEs as the worst in Asia.

Since the financial year 2014-15, Pakistan’s SOEs have been in a net loss. Every year, the loss gets higher. As of FY18, Pakistan recorded a cumulative total of Rs286 billion in net losses incurred by SOEs.

It is important to remember that net losses also account for all the SOEs that have made a profit. The projections after 2019 are missing in the report but it is no secret that the net profit of the SOEs of Pakistan is still below 0.

The World Bank report revealed that Pakistan’s SOEs eat more than Rs458 billion in public funds annually just to stay afloat and their combined loans and guarantees rose to almost 10 percent of GDP or Rs5.4 trillion in FY21, up from 3.1 percent of GDP (Rs 1.05 trillion) in 2016. The report deems the SOEs of Pakistan as the worst in Asia.