Privatisation, by any means

PML-N’s rush to privatise seems to be driven by centrality of privatisation to the administration’s budget strategy.

Ever since the May 2013 elections, there have been nearly persistent allegations that the ruling party is in an undue rush to privatise dozens of state-owned enterprises. While some of these allegations no doubt come from the party’s political opponents, we do wish that the Nawaz Administration would offer more transparency on the matter to allay the concerns of those who believe that valuable assets are being sold off to well-connected insiders.

We believe that the government is better off focusing on being an effective and impartial regulator rather than an owner and operator of large companies. Hence, we have been supportive of this administration’s drive to privatise state-owned companies, many of which are bleeding to the point of needing billions of rupees in taxpayer-funded bailouts every year. But we also believe in fairness and transparency, and we do not support strengthening oligarchy by providing politically connected individuals and businesses with unfair advantages.



It was the Musharraf Administration’s undue haste in privatising the Pakistan Steel Mills (PSM) that resulted in that transaction being challenged in court and eventually being halted, in the process, derailing the entire privatisation initiative. The failure of the PSM sale has cost taxpayers tens of billions of rupees in bailouts, and deprived the economy of cheap steel, which, in turn, renders heavy manufacturing in Pakistan economically unviable. And unlike its predecessors, the ruling PML-N has the additional baggage of a public perception that it is the party most dominated by big businesses. If the PML-N wishes to avoid a scandal, real or perceived, then it would be better served by offering far more information to the public than is currently being made available.

We suspect that part of the PML-N’s rush to privatise is driven by the centrality of privatisation to the administration’s budget strategy. Lower losses from bailing out state-owned companies is expected to significantly lower the budget deficit. That is a perfectly valid reason to support the sale of these companies, but we think the PML-N would find itself in not quite so much of a rush if it was willing to ask Pakistan’s wealthiest citizens to pay their fair share of taxes.

Published in The Express Tribune, January 7^th, 2014.

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