During the current year, two RLNG power plants, SME Bank, Services International Hotel, Jinnah Convention Centre, Islamabad and 27 other state-owned properties are being planned to be privatized.
However, before embarking on a new phase of selling family silver, we need first go through with a fine tooth comb the privatisation process undertaken over the past 35 years to assess its actual impact on our overall economy.
To start with, all the big units during this period were sold to foreigners. This has caused persistent pressure on balance-of- payments. Every year the remittance of profits increases as foreign buyers rarely invest their profits in Pakistan.
PTCL's divestment was the biggest joke played on the people of Pakistan because in the garb of privatisation, one of the most profitable assets worth billions and created in Pakistan's public sector was sold to Etisalat, a public sector entity of the UAE.
Pak Saudi Fertilizer was sold to Fauji Foundation, which is not privatisation by any standard.
The sale of four highly profitable fertilizer companies was totally inadvisable as fertilizer industries, specially Urea, is subsidized by selling gas at a cheaper price than it is sold for electricity generation or domestic use. Similarly, phosphatic fertilizer is subsidized in order to induce its adequate use by farmers as imported phosphatic is very expensive.
The sale of the LPG business by SSG and SNGP companies to Caltex and Shell was purposeless as the LPG business of both these gas companies was highly profitable.
The privatisation of Kot Addu power company was extremely ill-advised as this was Wapda's biggest generating unit. The Wapda cost of generating with gas feed stock was not more than 2.5 US cents per KHW, whereas now it has to buy at 4. 39 US cents, almost double the original rate.
The most tragic consequences of the first phase of privatisation was the closure of many units such as Naya Daur Motors, Dandot Cement, National Cement, General Refractories, Pak PVC, Swat Elutriation, Nowshera PVC, Nowshera Chemicals, Pak China Fertilizer, Karachi Pipe Mills, Metropolitan Steel, Pak Switchgear, Quality Steel, Indus Steel Pipe and Quaidabad Woollen Mills. This happened mostly because the buyers were not interested in running the business but only in stripping the assets.
So far Pakistan has not been able to reduce its fiscal deficit through privatisation. The policy of selling to the highest bidder without ascertaining their financial status and management capabilities has led to closure of all the engineering units as well as a few cement factories and other units.
What happens when you sell your family silver without bothering to look into the horse's mouth, especially if it is a foreign horse is graphically illustrated by how privatisation set in motion by the then British Prime Minister, Margaret Thatcher in early 1980s, has created the space for foreign governments to take over UK's profit-making assets.
According to Kenneth Surin (Ukania's Great Privatisation Heist-published in Counterpunch on March 20, 2019) Thatcher's idea was simple, but utterly misguided - sell off the publicly-owned enterprises, and everyone will be able to buy shares in the newly privatized companies.
Kenneth Surin teaches at Duke University, North Carolina.
As Marx noted, the stock exchange, where the shares of the newly privatized companies would be traded, is "where the little fish are swallowed by the sharks and the lambs by the stock exchange wolves".
The wealthy have always used their resources to acquire a monopoly on company shares. So when the public enterprises were put on sale at rock-bottom prices by Thatcher the wealthy rushed to collar the majority of the share offerings, the ensuing demand drove-up the price of the shares, and in so doing put nearly all of them beyond the reach of Joe and Jill Normal.
"The state bureaucrats so excoriated by Thatcher were replaced by private bureaucrats, albeit ones paid astronomical salaries when compared to those received by their counterparts in the annihilated state sector.
"Large foreign corporations and foreign governments now own nearly all these newly privatized state enterprises. Indeed, the supreme Thatcherite irony is that many of the enterprises privatized by her have now returned to government ownership, but alas for Brits these are foreign governments.
"The Brexit motto is "take back control", but at Rumford station there's a choice of trains into London: you can travel on one run by the Dutch, or one run by the Chinese. Someone going to neighbouring Basildon has to change at Upminster and buy a ticket from the Italian firm that operates C2C. Here's the fuller picture. ScotRail is operated by Abellio, which is wholly owned by the Dutch national rail operator Nederlandse Spoorwegen. Abellio also owns 60% of Greater Anglia trains (the remaining 40% is owned by the Japanese company Mitsui).West Midlands trains is 70% owned by Abellio, the remaining 30% is shared between Mitsui and another Japanese company JR East. Arriva Rail London is operated by Arriva, which is owned by the German national rail operator Deutsche Bahn. Arriva also operates Chiltern Railways and CrossCountry, Grand Central, and Northern. The already-mentioned C2C is owned by the Italian government's Trenitalia.
"Eurostar is operated by EIL, which is owned by the French government's SNCF (55%), Caisse de dépôt et placement du Québec (CDPQ) (30%), Hermes Infrastructure (10%) which is majority-owned by a US investment fund, and NMBS/SNCB (5%) which is the state railway company of Belgium.
The Chinese corporation MTR owns TfL rail and 30% of South Western Railway. Transport for Wales is owned by Keolis, a Franco-Québécois private operator of public transport. In fact, European state railways now own more than quarter of the UK's passenger-train system.
"The same situation exists with regard to the UK's energy, water, and telephone companies. London Electricity, SWEB, Seeboard and British Energy are owned by EDF Energy, a subsidiary of the French Government-owned energy company EDF (Électricité de France) Group. Powergen is owned by the German group E.ON. Calortex, Independent Energy and Midlands Electricity are owned by Npower, a subsidiary of German energy company RWE Group. ScottishPower is a subsidiary of Spanish company Iberdrola, which also owns Manweb, the energy company supplying Merseyside and North Wales.
"Anglian Water is owned by a consortium consisting of Canada Pension Plan Investment Board, Colonial First State Global Asset Management (owned by the Commonwealth Bank of Australia), IFM Investors (an Australian investment management firm), and 3i. The same consortium also owns Hartlepool Water. Northumbrian Water is owned by Cheung Kong Infrastructure Holdings (Hong Kong). Cheung Kong Infrastructure Holdings also owns Essex and Suffolk Water. Wessex Water is owned by YTL Corporation (Malaysia). Affinity Water is part owned by Morgan Stanley (USA).South East Water is owned by Hastings Diversified Utilities Fund/Utilities Trust of Australia. Sutton and East Surrey Water is owned by Sumitomo Corporation (Japan).
"Level 3 Communications (USA) owns a national optical fibre network.O2 runs a GSM-900 network and is owned by Telefónica (Spain). EE runs a GSM-1800 network and is a joint venture of Orange (France) and Deutsche Telecom (Germany)
"The UK's bus and airport companies are also largely foreign owned. Arriva buses is owned by the German national rail operator Deutsche Bahn. Bus and coach companies are also owned by ComfortDelGro (Singapore), RATP (France), and Transdev (France). Heathrow, Glasgow, and Southampton airports are owned by the Spanish Ferrovial (25%), Qatar Holding (20%), and Caisse de dépôt et placement du Québec (12.62%). Gatwick airport is owned by Global Infrastructure Partners (USA).The Ontario Teachers' Pension Plan owns 48.25% of Birmingham airport. IFM Investors (Australia), in addition to part-owning Anglian Water, also owns Manchester airport, the MM6 tollway, and the telecommunications company Arqiva.
"All this has been the consequence of asset-stripping undertaken on a massive scale. Assets belonging to the British public were thrown (literally) into the laps of foreign companies and governments.
"Thatcher, the Iron Lady initiated an act of daylight robbery from which the owners of private wealth and the governments of other countries benefitted immensely. The British public, which owned these assets, got stiffed."
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