Amid the ongoing talks with an International Monetary Fund (IMF) mission for a fresh loan, Prime Minister Shehbaz Sharif on Tuesday announced that Pakistan would privatise all state-owned enterprises (SOEs), with the exception of strategic entities -- broadening its initial plans to sell only loss-making ones.
The decision was announced after the premier chaired a review meeting of the privatisation process of loss-making SOEs, according to a statement issued by the PM’s Office.
The participants of the meeting gave the nod to the sale of both profitable and loss-making SOEs while discussing a roadmap for privatisation from 2024 to 2029.
During the huddle, PM Shehbaz instructed all federal ministries to take necessary action in this connection and cooperate with the Privatisation Commission.
He noted that the offloading of the SOEs was aimed at ensuring a business and investment-friendly environment as well saving taxpayers' money.
"The loss-making SOEs should be privatised on a priority basis," the premier instructed.
The participants of the huddle a pre-qualified panel of experts was being appointed in the Privatisation Commission to speed up the process.
Directing the relevant authorities to ensure transparency, the premier ordered to televise the privatisation process of the Pakistan International Airlines (PIA), including its bidding.
Following the premier’s instructions, the privatisation process of other institutions will also be broadcast live.
A roadmap of the Privatisation Programme 2024-2029 was presented during the meeting and the ministers were informed about the progress made so far for the sale of the SOEs.
It was said that the pre-qualification process for the PIA's privatisation would be completed by the end of the month and that the privatisation of power distribution companies had also been included in the programme.
The announcement came a day after an IMF mission opened talks in Islamabad for a new long-term Extended Fund Facility, following Pakistan's completion of a $3 billion standby arrangement in April this year that averted a sovereign debt default last summer.
Read Profitable SOEs erased from sell-off list
Privatisation of loss-making SOEs has long been on the IMF's list of recommendations for Pakistan, which is struggling with a high fiscal shortfall and a huge external financing gap.
Foreign exchange reserves are hardly enough to meet a couple of months of controlled imports. The IMF says SOEs in Pakistan hold sizable assets in comparison with most Middle East countries, at 44% of the GDP in 2019, yet their share of employment in the economy is relatively low. It estimates almost half of the SOEs operated at a loss in 2019.
Past privatisation drives have been patchy, mainly due to a lack of political will, market watchers say. “Any organisation that is involved in purely commercial work can't be strategic by its very nature, which means there can't be any strategic commercial SOEs,” former privatisation minister Fawad Hasan Fawad told Reuters on Tuesday
"So to me there are really no strategic SOEs," he said.
"The sooner we get rid of them the better. But this isn't the first time we have heard a PM say this and this may not be the last till these words are translated into a strategic action plan and implemented."
Pakistan has for years been pumping billions of dollars into cash-bleeding SOEs to keep them afloat, including the PIA, which is in its final phase of being sold off, with a deadline later this week to seek expressions of interest from potential buyers.
Pakistan has listed 25 entities and assets on its privatisation list, including the PIA. A majority of the entities are in the power sector, including four power plants, two of which are over 1,200MWs, as well as 10 generation and distribution companies.
The list also includes the valuable Roosevelt hotel in New York's Manhattan and two insurance companies. The pre-qualification process for PIA's selloff will be completed by end-May, the privatisation ministry told Tuesday's meeting, adding that discussions were underway to sell the airline-owned Roosevelt Hotel in New York.
It said a government-to-government transaction on First Women Bank Ltd was being discussed with the United Arab Emirates.
The ministry continued that that the power distribution companies had also been included in the privatisation plan for 2024-2029.
(With input from agencies)
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