Karachi : According to S.M. Tanveer ,World Bank data indicates that corruption by the administration of state-controlled sectors has led to Pakistan’s state-owned enterprises having the lowest profitability in the South Asian region compared to other countries. Unfortunately, no government appears willing to exit business operations and focus on public welfare.
Faraz-ur-Rehman ,stated that the privatization of banks and the telecom sector in Pakistan is considered a success story, significantly improving the financial condition of both the state and the public. Within just a few years of privatization, losses in these sectors were turned into profits. For example, in 2001, the after-tax profit of banks was PKR 9.77 billion, which increased to PKR 73.115 billion by 2007 following privatization. Consequently, the taxes contributed by banks to the national treasury also saw a significant rise, from PKR 10.8 billion in 2001 to PKR 33.8 billion in 2007. Similarly, the rate of loan forgiveness by state-owned banks was double that of the privatized banks.
S.M. Tanveer,highlighted that privatized banks quickly transitioned from poor to outstanding performance. Before privatization, defaults on advances were common due to poor risk management, but after privatization, substantial improvements were made, turning losses into profits. For instance, UBL’s pre-tax profit dropped from PKR 275 million in 1993 to just PKR 59 million in 1994, a 79% decline. After nationalization, various governments withdrew PKR 17 billion from the bank for political development schemes, which were never recovered. However, after the bank’s privatization in 2002, its profits increased significantly. Similarly, after privatization, MCB, Habib Bank, and Allied Bank also experienced remarkable improvements, contributing substantial taxes to the national treasury while achieving impressive profitability.
Faraz-ur-Rehman,pointed out that when the government privatized the telecom sector, MNAs and MPAs were focused on installing phones in their voters’ homes. Today, this is no longer necessary as the private sector has revolutionized the telecom industry.
S.M. Tanveer ,mentioned that from 1992 to 2001, industries such as automobiles, cement, chemicals, engineering, fertilizers, ghee, and minerals, as well as state-owned lands, were removed from state control. This had a positive impact on the national economy and led to new levels of development. However, the balance sheets of PIA, Pakistan Steel Mills, hotels, and power generation and distribution companies still indicate that “business is not the government’s job.
Faraz-ur-Rehman,shared Ministry of Finance data, stating that the total loss of state-run enterprises has reached PKR 905 billion, a 23% increase from last year. Independent sources suggest this loss has surged to PKR 1.4 trillion. This includes PIA’s loss of PKR 97.5 billion, National Highways Authority’s loss of PKR 168.5 billion, and Peshawar Electric Supply Company’s loss of PKR 202.2 billion. Unfortunately, the government recovers these losses by imposing higher taxes on the private sector or through electricity subsidies, resulting in neither state-run enterprises recovering from their losses nor the private sector thriving, leaving Pakistan with no option but to borrow to cover expenses.
S.M. Tanveer ,argued that if the Supreme Court were to conduct a forensic audit, it would reveal the flaws in the agreements made, and it would also become clear that the so-called international investors are, in fact, local investors. Regarding sovereign guarantees, the question of honoring them arises only when the agreements are made honestly. But if the government itself wants to engage in business, who will make the policy? Currently, 52% of IPPs are government-owned, making agreements with themselves, operating at 33% capacity, and charging consumers for 100% capacity. The remaining 28% of private sector IPPs should come to the negotiating table and agree to charge only for the electricity they sell.
Faraz-ur-Rehman ,concluded by stating that Pakistan’s economy is not performing, the industrial sector is stagnant, and exports are frozen at $23 billion. The government’s mismanagement of IPPs is being passed on to the public. The government must first acknowledge the problem to find a solution, as the entire business community across the country has united in protesting against the IPP agreements.
