Public sector units suffer hefty Rs3.74tr loss over five years

Published: May 16, 2018
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The government could keep assets of public sector enterprises, rent them to private-sector companies for management and charge 1% of total assets as annual rent. 

PHOTO: EXPRESS

The government could keep assets of public sector enterprises, rent them to private-sector companies for management and charge 1% of total assets as annual rent. PHOTO: EXPRESS

KARACHI: Although government officials are boasting about their economic achievements over its five-year tenure which is about to end, public sector enterprises (PSEs) have continued to bleed and suffered a cumulative loss of Rs3.746 trillion over that period.

Earlier, during the tenure of Pakistan Peoples Party administration, the scenario was not favourable either as these state-owned enterprises recorded an average loss of Rs400 billion annually.

Seeing that, the ruling Pakistan Muslim League-Nawaz (PML-N) party had made reforms in state enterprises a crucial part of its election campaign through a combination of restructuring and privatisation.

Reform necessary for success of wasteful, large state enterprises

However, after the PML-N took reins of the country in June 2013, losses at state units continued to mount. They increased to Rs495 billion in fiscal year 2013-14, Rs570 billion in 2014-15, Rs712 billion in 2015-16, Rs862 billion in 2016-17 and crossed the trillion mark in 2017-18, recording a huge loss of Rs1.109 trillion.

According to renowned economist Kaiser Bengali, there are three ways to run these public sector enterprises. First, let them be state-owned and run efficiently, which the government has failed to do in all these years.

Companies in Pakistan lack a clearly defined strategy

Second, they could be privatised as happened in the case of KESC, currently K-Electric. However, according to Bengali, it has also been a failure.

Elaborating, he said K-Electric had been robbing people through inflated bills and despite being privatised for a while now it had not been able to resolve the load-shedding problem.

“So, I think privatisation is not the answer to our public sector enterprises’ woes,” Bengali remarked while talking to The Express Tribune.

Third, the government could keep assets of public sector enterprises, rent them to private-sector companies for management and charge 1% of total assets as annual rent. “This way, these enterprises won’t remain loss-making,” he said.

Public-private dialogue urged for development

He cited the example of a 67km four-lane highway between Hyderabad and Mirpurkhas, which was a public-private partnership project between Deokjae Construction Company of South Korea and the Sindh government.

The project is based on build, operate and transfer (BOT) model, meaning the Korean company will build and run it and when it recovers the cost, it will transfer the project to the host government.

He pointed out that though there was a debate that toll taxes were too high, the road had benefitted mango growers and traders in swiftly transporting the perishable fruit to markets.

Bengali also cited the example of popular singer Shahzad Roy that had taken over management of a government school in Karachi in an effort to run it efficiently and transparently.

Published in The Express Tribune, May 16th, 2018.

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Reader Comments (1)

  • Farooq Ahmed
    May 16, 2018 - 3:22PM

    Cut losses for poor masses, don’t continue this bleeding for a few thousandsRecommend

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