Bleeding the country dry: Five public entities lose Rs393b over four years

Published: April 24, 2012

These entities include Pak­istan Railways (PR), Pakistan International Airlines (PIA), Pakistan Steel Mills (PSM), Pakistan Agriculture Storage and Services Corporation (Passco), and the National Highway Authority (NHA).

ISLAMABAD: 

Five public sector enterprises are either operating without a governing board, or are run by unskilled persons. In the latter case, retired or serving bureaucrats, or unqualified but politically well-connected individuals, have been appointed to run these enterprises. According to sources, these entities have collectively caused Rs393 billion in losses to the national exchequer during four years of the Pakistan Peoples Party government.

These entities include Pak­istan Railways (PR), Pakistan International Airlines (PIA), Pakistan Steel Mills (PSM), Pakistan Agriculture Storage and Services Corporation (Passco), and the National Highway Authority (NHA).

Furthermore, losses incurred by Pepco due to subsidies– estimated at Rs1.2 trillion by the finance ministry – are not included in this assessment.

Measures like the establishment of the Cabinet Committee on Restructuring (CCOR), headed by Finance Minister Dr Abdul Hafeez Shaikh, failed to achieve lasting improvements in these corporations.

A special wing of the finance ministry – the Economic Reforms Unit – also failed to effect any positive change in these loss-making corporations.

National Highway Authority

The entity recorded Rs150 billion in losses during the four years under review – the highest among the five. When the PPP took over the government, the NHA recorded annual losses of Rs30 billion. These surged to Rs33.5 billion in 2008, Rs35.3 billion in 2009, Rs44.4 billion in 2010 and Rs36.5 billion in the last fiscal year, according to the official report.

Pakistan International Airlines

The national flag-carrier’s accumulative financial losses in three years and nine months stood at Rs81 billion. In 2007, the entity’s annual losses had been registered at Rs13.4 billion. These surged to Rs36.1 billion in 2008, Rs4.9 billion in 2009, Rs20.8 billion in 2010 and Rs 19.3 billion losses in nine months of last year.

PIA stands out as a bad case in nepotism. Minister for Defence Ahmad Mukhtar is chairman of the board, and the government recently appointed retired Air Marshal Rao Qamar Suleman as the new managing director. The four directors of the board are qualified with, at most, a bachelor’s degree. Malik Nazir Ahmad has a Bachelor of Arts (BA) degree; he was appointed in March 2008. Javed Akhtar and Makhdoom Syed Ahmad Mahmood also hold a bachelor’s degree. The latter is a Member of the Punjab Assembly, and his profile reads that “he has extensively travelled abroad”.  Syed Yousaf Waqar has a bachelor’s degree in business administration.  Secretary Finance Abdul Wajid Rana is also a member of the board.

Pakistan Steel Mills

From 2009 to 2011, PSM’s accumulated losses stood at Rs49.5 billion. The country’s largest industrial unit was in profit up to 2008, but political appointments have led to the near collapse of the behemoth. In 2009, it suffered Rs26.5 billion in losses; the figure came down to Rs11.5 billion in 2010, and was ‘sustained’ at this level in 2011.

Out of the members of the board, five are either serving or retired bureaucrats. The chairman of the board, Fazalullah Qureshi, is a retired federal secretary. Two members of the board are owners of steel mills.  Mahreen Razaque Bhutto, an MNA on a PPP ticket, is also a member of the Board.

Pakistan Railways

PR incurred Rs96 billion in losses during the reviewed period. Before the government took over, its annual losses stood at Rs15.2 billion. This figure ballooned to Rs16.9 billion in 2008, Rs23 billion in 2009, Rs25 billion in 2010 and Rs31.1 billion during the last fiscal year. The government has only recently constituted a board of directors for the entity.

PASSCO

Passco recorded Rs34.6 billion in losses during the reviewed period. During the last year of the Musharraf government, Passco suffered Rs2.5 billion losses. The figure swelled to Rs3.4 billion in 2008, Rs3.3 billion in 2009, Rs 13.8 billion in 2010 and Rs14.1 billion in 2011.

A serving Federal Secretary, Shafqat Hussain Nagmi, is chairman of the Passco board; while a serving Major General, Shohail Shafqat, is the managing director of the entity. Three bankers are also members of the board.

Published in The Express Tribune, April 24th, 2012.

Reader Comments (10)

  • Apr 24, 2012 - 11:45AM

    1 – Pakistan Steel Mills had been profitable during Gen Musharraf’s govt and look at it now.
    2 – Passco losses in Musharraf Govt 2.5 billion and now 42 billion. “HAHAHA”
    3 – Pakistan railway then 15 billion and now 32 billion.
    Jiye Bhutto..

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  • Samir
    Apr 24, 2012 - 12:05PM

    Complete joke of a government.. PIA is long overdue for a crash based on this.

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  • kalia
    Apr 24, 2012 - 12:24PM

    public entities are source for corruption in government. . i think they should be privatize like KESC, it would be good for consumer and government losses. they are not operating these companies for public service, but using it for corruption. people of Pakistan should wake up and vote the right candidate. for me it PTI.

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  • Apr 24, 2012 - 1:10PM

    393 billion rupees lost in just 4 years of our democratic government is not a good sign. These Institutions unless privatized are going to sink in due course of time. All such Institutions which are running at a loss must be privatized. The only hitch preventing privatization is that “there is a method in madness.”Recommend

  • A J Khan
    Apr 24, 2012 - 1:40PM

    Pakistan can cut its losses by:-
    1. Privatize the Public Sector Enterprises.
    2. Cut the Public sector jobs/ Public administration and Ministries by at least 50%.
    3. Create a data base for all the ministries and departments. Computerize the Public Sector offices and Link all financial allocations through the Data Base.
    4. Delegitimize discretionary powers of bureaucracy.
    5. Make financial corruption above Rupees ten million punishable by death and lesser by imprisonment.
    6. Stringent and special rules should be framed for department which handle public money .
    7. Judiciary must always decide cases in a given framework

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  • asad
    Apr 24, 2012 - 2:09PM

    Welcome to Somalia!

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  • M. Ahmed
    Apr 24, 2012 - 2:58PM

    Pakistan is bleeding! Any patriots around? The land of the pure abounds in impure deeds.
    No wonder we have got where are today. Again we will hear “we have to build a new Pakistan”. The rot is finally stinking.

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  • Ayesha
    Apr 24, 2012 - 3:22PM

    How can you make a case for cutting defense budget when your own house is not in order.

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  • Repatriated
    Apr 24, 2012 - 6:37PM

    While I think the PSE’s should be privatized and have private and professional management and the PPP has shown it has been horrible with political appointments, it’s not fair to just look the performance of PSEs during the last 4 years and blame that strictly on management issues. You have to take into account the economic cycle, whether fundamentals of those businesses have changed, changes in input costs, how much of the losses are due to legacy issues left by previous managers etc. This article is short-sighted and has a flawed approach to analyzing the performances PSEs under the current government.

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  • Politician
    Apr 24, 2012 - 10:23PM

    Come on guys – We made tremendous profits/revenues which are probably equal to the losses in all these four and more. That industry is Pakistan Political Affairs Corporation :p

    At least we are doing something…..

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