By Karim Madad

ISLAMABAD Aug 16 (INP-WealthPK): The business community has urged the government to privatise all state-owned enterprises (SOEs) incurring heavy losses to the national exchequer since decades.

Talking to a delegation of industrialists and traders, Chief Executive Officer (CEO) of Pakistan Furniture Council Mian Kashif Ashfaq said the manifestoes of most mainstream political parties throughout the country advocate divestment of government stakes in the SOEs to curtail losses, and reduce government footprint in business, but these pledges have not been materialised even after a long span of time.

After the meeting, Mian Kashif Ashfaq told WealthPK that the loss-making SOEs cost over 4.5% of the gross domestic product (GDP) according to the estimates of financial year 2018-19. It also included losses of 2% of GDP on account of only three entities i.e., Pakistan International Airlines (PIA), Pakistan Steel Mills (PSM), and Pakistan Railways.

Mian Kashif said the previous government finalised by March 2021 a triage of 85 out of total 212 public sector companies for their ultimate privatisation, liquidity or retention in the public sector. The overall revenues of all these 85 SOEs in 2018-19 amounted to about Rs4 trillion, while the book value of their assets stood at Rs19 trillion, but still caused about R287 billion losses in 2017-18.

Mian Kashif said another 24 targeted companies in the pipeline for sale in next phase between 2023-24 must also be placed for transparent privatisation. He said it’s an established fact worldwide that business activities are always carried by private sector, not public sector, as private sector employs best possible ways to run in profit.

Participants of the meeting urged the government to offer packages of incentives to buyers of loss-making SOEs to run efficiently.

The federal secretary of Privatisation Ministry said at a recent meeting of the Senate Standing Committee on Privatisation that the Cabinet Committee on Privatisation (CCoP) in May 2021 had approved concession contracts for eight of the 10 DISCOs (power distribution companies), whereas the management contract was approved for Quetta Electric Supply Company (QESCO) and Tribal Electric Supply Company (TESCO).

Furthermore, in view of the past lessons learnt and latest global practices, for the privatisation of DISCOs, “Pakistan Model” was also proposed by a working group comprising officials from the Ministry of Privatisation, National Electric Power Regulatory Authority (NEPRA), Power Division, Central Power Purchasing Agency (CPPA-G) and World Bank.

However, there have been subsequent changes in policy and regulatory framework which has direct impact on DISCOs and the scope of concession and management contracts to be developed as part of this arrangement. The members of the standing committee discussed the extent of technical and commercial losses in various DISCOs and efforts being put in by the Power Division to improve.

The committee was also informed that the CCoP in its meeting held in June this year directed the Power Division to write to all the provinces through the Ministry of Inter-Provincial Coordination (IPC) for negotiations for privatization of the relevant DISCOs.

Federal Minister for Privatisation Abid Hussain Bhayo said Sindh province is already in the process of negotiation with Power Division for the acquisition of Sukkur Electric Supply Company (SEPCO) and Hyderabad Electric Supply Company (HESCO).

The standing committee directed that regardless of participation or privatisation, as per the new policy, the role of provincial, district and law-enforcing agencies should be institutionalized in curbing line losses and poor collections.

Credit: Independent News Pakistan-WealthPk