ARTICLE: The government has finally decided to privatise Pakistan Steel Milles (PSM). Though it is late by two years under the incumbent government, it is a welcome step.
The government spent around Rs 90 billion in last 4 years to bail PSM out. It was an exercise in futility, which was also carried out by all the previous governments since year 2000 and earlier. It is largely about the salaries of its 9,500 employees sitting idle as PSM is not functional since 2015. The accumulated losses of PSM are reported to stand over Rs 500 billion.
In a similar development the government has decided to do away with the practice of bail out and instead decided to lay off the employees under a package. Again a welcome step in the larger national interest.
Earlier, the incumbent government has made several attempts to inject life into this dead horse.
In the year 2018-19, PSM along with PIA and other state enterprises, was delisted from the privatisation. After approval from cabinet, a business revival plan was prepared at the Ministry of Industries. Salaries and wages for PSM's employees were revived under that plan.
The government then decided to set up 'Sarmaya-e-Pakistan Holding Ltd' for the management of state-owned enterprises with 100 percent government shareholdings. Unfortunately, however, this scheme did not work for the sole reason: inherent flaws in the entire public sector of Pakistan.
In Pakistan, business enterprises in the public sector are used by governments and legislators to give jobs for party loyalists and place incompetent managements. Such overstaffed and vested interest-driven organisations have absolutely no chance of survival in price- and quality-driven market of competition.
Having learnt from the PSM experience, it is about time the government went for widespread privatisation or liquidation of business enterprises in the public sector, including PIA, power generation and distribution companies and similar to spare the nation from doling out good money for a lost cause.
In the aftermath of financial weaknesses and the crisis emerging out of coronavirus, the incumbent government does not have many options to support its economy and social responsibility to its people, who are about to embark on a difficult path of survival. Support from international donors on account of coronavirus is too meagre and only for a limited period. The government has to bring in greater financial discipline in all facets of governance without any further loss of time.
The task of privatisation will become more formidable mainly because of slow-paced working style of Privatisation Commission of Pakistan and its support partners. The commission and energy experts are still struggling with legal, technical and tariff issues for the privatisation of the two RLNG-based power plants: Haveli Bahadurshah and Balloki of the National Power Plant Management Company Limited (NPPMCL), whereas there appears to be no realistic plan or roadmap for the privatisation or/and liquidation of public sector enterprises in public knowledge.
The years ahead will be very difficult for the country - financially, socially and in terms of internal and external security. The ostrich syndrome is no option but as we cannot stick our heads in the sand to ignore challenges. We need to think deeper to come up with new ideas.
(The writer is former President of Overseas Investors Chambers of Commerce and Industry)