January 08, 2014
“Nothing is sacred … we are packaging up our companies … the state-owned corporations have been well-run for the past few years …. And now we are offering them to investors from all over the world ….!”
Such was the arrogance (reported by BBC) with which Shaukat Aziz treated Pakistan’s public property, to be handed out on a silver platter, as if from his personal fiefdom. But then, his sentiments did not include homeland loyalty.
For decades, the secretive and unaccountable World Bank/IMF have been doing what they do best – turning a blind eye to and accommodating greedy, corrupt, southern governments indulging in graft and patronage. A highly-respected senior civil servant publicly revealed that in the seventies, World Bank/IMF pushed Bhutto towards nationalization which the then government was neither equipped nor competent to execute. A decade later when the anticipated damage was done, IMF about-turned, demanding denationalization and privatisation ! — Apparently this was its modus operandi in many countries such as in Africa. It also explains how efficient, profitable Pakistani units were suddenly rendered “sick” a few years after nationalization.
State institutions buckle when subjected to non-professionalism, political interference, and absence of transparency and accountability. Few bureaucrats and politicians are trained or experienced in running business. Even educated non-specialists or amateurs are not allowed to perform surgery; how can ignoramuses? Political elements, even if elected, but unavoidably biased, have to be restrained by law from running or dictating to public institutions.
Conversely, what is the excuse for selling off well-run, highly-profitable state enterprises? For the last 20 years, Pakistani citizens’ assets were sold to private parties’ without public consent. If at all, only losing enterprises may be put on the auction block. But first the cause for failure has to be addressed — by change of management.
Besides, all state enterprises do not necessarily run badly. On the contrary, some do exceedingly well. Like the two blue-chip companies, OGDCL and Pakistan Petroleum Limited. OGDCL earned Rs. 91 billion profit during 2012-13 and contributed Rs. 130 billion to the national exchequer through corporate tax, royalties, sales tax, excise duty, development surcharge and dividends. PPL earned Rs. 42 billion during the same period and contributed Rs. 52 billion in taxes.
The doublespeak rationale for selling off highly profitable enterprises is acutely suspect, given self-serving and unproven free-market policies — which are ultimately achieved only through coercive and unequal financial and trade terms between poor and rich countries or investors, and blatant violations of basic rights. ‘Efficiency’, usually achieved with exploitation and starvation wages, only enriches shareholders, not the public.
At this point as government demonstrates unholy haste to sell off all remaining public assets, it’s pertinent to ask: why then were state corporations created at all? Following unsavoury origins in colonisation, state corporations were later adapted for public benefit or to protect essential and strategic assets such as oil and gas. Besides, the private sector simply could not serve non-profit areas where investment was not forthcoming, such as in water and sanitation, telecommunications, utilities, and so on.
Yet citizens, by natural right, simply had to be served, since the government took over natural resources and the Commons (from which people previously derived their livelihoods) on the grounds that these would be better harnessed to distribute benefits universally. It therefore made sense to create corporations to do the job, financed by public revenue. Most municipalities around the world operate this way.
Not that state enterprises invariably work perfectly. Their success is only as good as the quality of democracy and representative intent. Where political interference and corruption intervene, losses and poor performance inevitably follow.
Essentials enjoying totally captive markets such as telecommunications and energy once provided the biggest profits with that much more to roll back. It doesn’t justify sell-off just to please loan sharks like IMF — which is all that ‘governance’ seems to boil down to today. PTCL was in fact hailed as the world’s highest telecommunications profit-maker when it was privatised.
Sui Gas, Landhi Tool Factory, Kot Addu Power Plant, the fertilizer and cement factories were all profitable, yet sold off at throwaway prices at a fraction of their market value. Someone pocketing something for the favour? — Hard to prove. Inexplicably, the state is not even retaining 51% controlling share of these so-called private-public partnerships, but literally gifting away ready-made running enterprises built over decades with taxpayer money for as little as 25%. What should have accrued to citizens will line the pockets of a relatively small number of shareholders. It should have been stopped by the Supreme Court. Or is World Bank/IMF above our Supreme Court?
Every drive for privatisation has been cleverly preceded by a flood of pre-emptive badmouthing and propaganda, as happened when nationalized banks were privatised. True, banks faced unacceptable losses. But why did it happen? – Official blame was placed on ‘mismanagement’. Correct — because politicians, elected parliamentarians and powerful businessmen treated public banks as their personal kitty and helped themselves to vast loans not returned to this day. They overlook the reality that a degree of integrity is required for any enterprise or economy to succeed. Even crooks need honest accountants.
The last government’s five years turned out to be a mopping-up operation. The bill for blatant corruption, non-payment of bills to KESC and WAPDA by government and private influentials, was Rs.1800 billion, which does not even include losses of previous years.
The profits of state enterprises alone could have boosted development and mass job-creation but evaporated into debt repayment, and unwarranted, discretionary and unproductive government spending.
The Privatisation Commission boasts 167 transactions since 1991 for a mere 9 billion dollars. Whoever benefitted, it was not the economy or citizenry. Now Pakistan Railways, PIA, PSM, PSO, Pakistan Post, shipping corporations, and more banks – over sixty more units — are now on the chopping block. With consistent one-way transfer of wealth, it’s not surprising that Pakistan is concurrently dirt-poor and obscenely rich.
2014 does not bode well for us. We face selling off what little is left of our sovereignty. When there’s economic and social collapse, the decision-makers and their cronies will cut and run as always, with offshore accounts to succor them. If there’s no suo moto to rectify this, Justice Ifthikar Chaudhury’s legacy will stall. Public interest litigation is still unaffordable for most.
What happens to the majority when they don’t have resources — material or financial — to rebuild livelihoods on? What will be left to be called Pakistani ?
This article was published in The Nation on 8 January, 2014