Every few months, the government renews its claim that the privatisation of loss-making State-Owned Enterprises (SOEs) is just around the corner.
Yet these entities continue to drain more than Rs800 billion from the national exchequer every year, and the timelines for their divestment keep shifting. The result is a privatisation program that remains chronically stalled; announced often, delivered rarely.
Multiple factors contribute to these delays, but one stands out above the rest: the government’s unwillingness to truly let go. It is willing to sell shares but not surrender power, insisting on retaining influence through board seats, regulatory oversight, or both. In practice, Pakistan’s privatisation model often transfers ownership but preserves control.
This pattern is not theoretical. It is visible throughout the country’s privatisation history. The banking sector illustrates this reluctance clearly.
When United Bank Limited (UBL) was privatized in 2002, the government sold majority control but kept a minority stake for years. Habib Bank Limited (HBL) experienced the same cautious approach; the state sold control to the Aga Khan Fund in 2004 yet did not fully exit until 2015.
Allied Bank Limited (ABL) moved to private ownership in 1991, but residual government influence remained for an extended period. Even Kot Addu Power Company (KAPCO), privatised in stages, continued to operate under meaningful state influence because of the government’s role in pricing, tariffs, and regulatory approvals.
K-Electric (KE) is another major example of this hybrid arrangement. Although the government sold a controlling stake nearly two decades ago, it still retains close to a quarter of the company’s shares.
Despite private shareholders being responsible for investment and management decisions, KE’s operations remain subject to heavy government involvement in tariff determinations, fuel supply mechanisms, and regulatory permissions. What should have been a clean shift to private management has instead remained a shared and often contested space.
PIA now risks becoming the next addition to this list. The government plans to sell around 60 percent of its stake, seemingly transferring majority control to private investors. Yet the structure of the transaction makes clear that this will not be a clean exit.
The government is expected to retain a substantial minority share and will continue to shape the airline’s operations through aviation policy, bilateral air agreements, route allocations, subsidies, sovereign guarantees, and regulatory approvals. Ownership may shift, but strategic authority will remain closely tied to government oversight.
The challenges facing PIA’s privatization are further complicated by ongoing litigation and disputes involving liabilities, employee rights, asset separation, and legacy obligations. These legal battles not only delay the process but also increase uncertainty for any potential investor. Instead of resolving disputes before entering the market, the government tends to proceed with lingering legal complications, creating a situation in which privatization becomes dependent on court outcomes rather than policy clarity.
This pattern of retaining control even after privatization has undermined confidence in Pakistan’s public–private model. Investors expect operational freedom when they acquire a majority stake, but they often encounter political interference, shifting regulations, and inconsistent policies.
The result is predictable: international investor interest in Pakistan’s state-owned enterprises has steadily declined. Apart from a small pool of regional or existing players, few global investors are willing to commit capital to entities where ownership does not translate into authority and where regulatory and political risks consistently overshadow commercial considerations.
At the same time, scrutiny of the private sector far exceeds that applied to the state itself. Privatized entities are held to high standards of performance, reporting, and accountability, while public-sector enterprises that incur hundreds of billions in losses seldom publish timely accounts, face limited oversight, and are rarely subjected to the same reform demands. Those who criticize private operators often overlook the far weaker governance and accountability frameworks within the very SOEs that remain under the state’s direct control.
Across these cases, one conclusion emerges clearly. The government sells control but clings to power. Privatization becomes a means to reduce fiscal pressure rather than a genuine reform strategy.
Ownership shifts to the private sector, but authority remains concentrated within the state, whether through minority shareholding, regulatory dominance, or political intervention. The outcome is a set of enterprises that are privatized in form but not in function, leaving both investors and citizens struggling with inefficiencies that persist because the government is unwilling to let go.