Privatisation of eight PSEs: government has failed to fulfil commitment to its donors

The government has yet to fulfil its commitment to international donors to restructure/privatise the Trading Corporation of Pakistan (TCP) and the Pakistan Agricultural Storage and Services Corporation (Passco), which are causing a loss of billions of rupees each year to the national exchequer.
To reduce the fiscal deficit to 4.7 percent of GDP, the government informed donors during the Pakistan Development Forum held in November 2010 that it would restructure eight public sector enterprises (PSEs) including Trading Corporation of Pakistan (TCP), Pakistan Agricultural Storage and Services Corporation (Passco), Pakistan International Airlines (PIA), Pakistan Electric Power Company (Pepco), Pakistan Steel, Pakistan Railways, Utility Stores Corporation (USC), and National Highway Authority (NHA).
In 2008-09, Passco suffered a loss of Rs 440.7 million while the commodity operation undertaken by TCP increased its liability by Rs 400 billion, which led to reduced lending to the private sector by the banks. Cumulative losses suffered by government-owned enterprises in 2009-10 were estimated at a whopping Rs 245 billion. Given the declining fiscal situation, losses on this scale are unsustainable.
Ibrahim Mughal, Chairman of AgriForum Pakistan, said that the country is facing grain storage problem on a large scale, attributable to traditional methods of seed storage and inadequate commercial grain storage centres. Storage of grains in godowns to protect it from birds, rats and insect pests, causes damage to seed and grains, he said.
He urged the government to privatise Passco and TCP as soon as possible, saying that TCP and provincial food departments and Passco were wasting government resources. He said that Passco employs over 1250 people and stores about 2 million tons of grains including wheat, and paddy, etc. Similarly, there are thousands of employees in TCP and provincial food departments, who are doing nothing for the betterment of the agriculture sector.
He said that the involvement of private sector in commodity storage would save billions of rupees for the country, besides improving grain protection. Food grain storage remains a sensitive issue for the farmers as well as for the government and is a serious issue all over the world, he added.
The increase in production of major commodities like wheat, rice, cotton and oilseeds of traditional and non-traditional varieties has led to problems of retention for long periods. The existing storage facilities are inadequate at various levels, he added.
Ibrahim said that due to lack of storage facilities hundreds of thousand of tons of wheat and other food and cash crops such as rice, sugarcane and cotton, oilseeds and pulses are stored in temporary facilities that afford inadequate protection and pilferage is almost routine. He added that this year private sector has procured over 4 million tons of wheat and therefore there is no shortage of wheat flour in the market, which accounts for stable prices.
The storage of wheat and rice as well as seeds of pulses and oilseed are important due to their food value. Seed hazards occur due to poor storage facilities. Wheat is only a grain crop that is produced with low-cost technology due to minimum use of pesticides except for inputs such as seed, fertiliser and farm machinery etc, while crops like rice, cotton and sugarcane are cost effective and need proper care in handling and storage.