Privatisation: building the capacity to deliver

This is the ninth article of a ten-part series of articles on Pakistan’s state-owned enterprises and privatisation.

The previous eight examined governance, successful and failed transactions, Pakistan Railways and PIA, and the cost of delayed reform. This article turns to the Privatisation Commission.

The final article addresses the legal and political architecture needed to sustain reform.

Pakistan no longer lacks a policy mandate or pipeline. PIA has shown that disciplined preparation and competition can transform a failed transaction. What it still lacks is an institution capable of executing several complex transactions at once, without rebuilding expertise for every deal.

Privatisation must move from an episodic exercise to a permanent state capability: a prioritised, investable pipeline; a disciplined process; an effective board; and professional management that retains knowledge from one transaction to the next.

Fix the process

The starting point is governance. The Commission itself must become a modern, professionally governed institution capable of delivering more transactions - and delivering them better. Thereafter comes transaction readiness.

An entity should not be marketed merely because it appears on a privatisation list. Before launch, government and the Commission should settle the transaction objective, identify retained liabilities, define public-service obligations, complete essential due diligence and resolve regulatory issues likely to deter investors. A premature launch wastes time and damages credibility.

Once launched, workstreams should run in parallel under one accountable transaction leader, against a single decision calendar, with clear milestones and reasons recorded for slippage. Transactions differ too widely for rigid statutory deadlines, but delay should be the exception, not the operating model.

Digital execution should be standard: secure virtual data rooms, electronic document tracking and, where feasible, electronic bid submission. Marketing should move beyond newspaper advertisements, with early sounding of strategic investors, sector operators and institutional investors.

Competition remains essential, but three bidders should be an objective rather than an inflexible condition. Specialised assets may attract fewer credible buyers; where competition is weak, the Commission should explain whether valuation, structure or timing justify redesign - or why proceeding still serves the public interest.

Build the governance

The Ordinance vests general management and administration in the Board, but also makes the Chairman responsible for day-to-day administration, blurring governance and management. The Board should set direction, approve strategy and the prioritised pipeline, appoint competent management, oversee performance, and hold management accountable. It should not become a transaction-management committee.

The Minister for Privatisation should chair the Board and provide the drive needed to overcome inter-ministerial resistance. But the Chairman should be a strategic, non-executive leader, not the Commission’s chief executive. Day-to-day management should rest with a professionally recruited Chief Executive, selected against demanding criteria and measurable targets. The present leadership has created welcome momentum, but sound institutions cannot depend on individuals; these roles should be defined in law.

The Board should combine government authority with independent commercial judgement. The Commission is not a commercial SOE, so the 2023 SOE governance framework cannot simply be transplanted, but its principles - transparent selection, defined tenure, fit-and-proper criteria, skill diversity and performance evaluation - are relevant. The Commission should operate as a professional institution, not as a ministry with a bureaucrat effectively serving as chief executive.

A majority of Board members should be independent professionals, with limited government representation. Finance, law and line ministries should participate when needed without crowding the Board with officials accountable elsewhere. Independent members should be selected transparently for skills in investment banking, capital markets, law, valuation, accounting, restructuring and major sectors, with fixed terms, conflict rules and remuneration sufficient to attract high-quality talent and reinforce accountability.

An effective Board creates value through the programme it governs: approving the pipeline, assessing market readiness, monitoring milestones, challenging weak assumptions and holding management accountable for slippage, adviser performance, costs and post-closing obligations. The Board should govern the institution; management should execute the deals.

The Board should also own the Commission’s financial and performance reporting. The Ordinance requires periodic reports to government and an annual report within six months of year-end, yet reporting has not always been timely; the FY2023-24 annual report was published only in March 2026. The Board should ensure timely quarterly and annual reports, prepared with the discipline and quality expected of a listed company. These should cover pipeline status, milestones achieved and missed, reasons for delays, transaction costs, adviser performance, investor interest, proceeds and post-closing obligations. Transparency should itself become a measure of institutional performance.

Build deal teams

The Commission’s deepest capacity gap lies below the Board. It has historically relied on civil servants, deputationists and external advisers hired transaction by transaction. Advisers remain important, but cannot substitute for an informed client. Nor should selection default to large consortiums because they handled past transactions. Such arrangements can be cumbersome, expensive and slow to innovate. For some assignments, a focused firm or individual specialist with the right expertise may add more value.

What matters is the quality of the proposed team, not the size or brand of the adviser. Selection should assess the individuals who will do the work, their understanding of the asset and market, the practicality and originality of their approach, and evidence of value created in comparable assignments. Past mandates are relevant, but should not become a proxy for performance when there has been little assessment of whether advisers improved valuation, attracted stronger investors, accelerated execution or produced a better transaction.

The Commission needs permanent transaction teams recruited competitively from public and private markets: professionals in finance, law, accounting, valuation, project management and relevant sectors, organised around energy, transport and financial services. A central transaction-management office should maintain templates, precedents, data standards, adviser evaluations and lessons from completed and failed deals.

These teams should assume responsibility when an entity enters the active pipeline, preserving continuity through changes in government. External advisers should supplement, not substitute for, internal capability. An informed in-house team can challenge assumptions, control costs and negotiate better terms. Capacity must also extend beyond signing: a post-transaction function should track payments, investment commitments, employee protections and other undertakings until discharged. Pakistan’s experience with PTCL and K-Electric shows that public value can be lost after a sale when agreements are not rigorously enforced.

Professional capacity requires competitive compensation, but not a parallel bureaucracy. Staff should be hired on performance-based contracts, subject to strong conflict-of-interest and cooling-off rules. The Commission should have a transparent, ring-fenced transaction budget, initially funded through the budget and later through a defined share of transaction fees or proceeds, subject to audit. Against losses from delayed reform running into trillions, the cost of a capable institution is marginal.

Pakistan’s constraint is no longer knowing what to privatise or why. It is the ability to prepare, structure, and close several transactions credibly while protecting public value. A readiness-based process, an accountable Board, clear executive leadership and permanent deal teams can turn privatisation from an occasional achievement into an executable programme.

These reforms will not endure through political change unless embedded in law and backed by a coalition willing to bear the short-term costs. The final article sets out that architecture.

Copyright Business Recorder, 2026