- From failed bids to international interest, Pakistan’s SOE privatisation highlights the balance between public needs and fiscal goals.
Privatisation of state-owned enterprises (SOEs) in Pakistan has been a significant policy focus for the government over several decades. The process, which began in the late 1980s, aims to reduce the government’s financial burden, improve efficiency in sectors dominated by public entities and stimulate private-sector investment. However, privatisation in Pakistan has been met with both support and resistance due to various economic, social, and political factors.
SOEs in Pakistan have historically suffered from inefficiencies, operational losses, and poor management. Privatisation is viewed as a means to make these enterprises more competitive and productive. The government also sees privatisation as a way to generate revenue to address fiscal deficits. This revenue can be reinvested into development projects, social programs, or debt servicing. Many SOEs in Pakistan are heavily subsidised, which burdens public finances. Privatisation aims to reduce or eliminate this subsidy dependence. By transferring state-owned assets to the private sector, the government hopes to attract foreign and domestic investment, which can drive economic growth.
The first major wave of privatisation took place under Prime Ministers Benazir Bhutto and then Nawaz Sharif. This phase focused primarily on banking, telecommunications, and some industrial units. During the rule of General Pervez Musharraf, privatisation efforts continued with sectors like telecommunications (e.g., Pakistan Telecommunication Company Limited – PTCL) and banking.
Some high-profile sales, such as the PTCL privatisation, faced resistance and controversy. The process slowed between 2008 and 2013 but was revived under the Pakistan Muslim League (Nawaz) government, which pursued privatisation in energy, steel, and other sectors. Recent efforts under ex-prime minister Imran Khan’s government targeted twenty-four SOEs like Pakistan Steel Mills and the national airline, Pakistan International Airlines (PIA).
Recently, the bidding process of PIA was marred by a lack of decision-making as only one bid was offered for Rs. 10 billion by a property tycoon against a government demand of Rs. 85 billion. The offer has been scraped and the bidding process has started afresh. Sources close to the matter say that it will be sold through a government-to-government deal with either Abu Dhabi or Qatar under the lead facilitation of SIFC. It is pertinent to mention that a group of overseas Pakistanis and a business forum has expressed their intention to buy PIA at a much higher price than the government’s demand.
Privatisation is often opposed by labour unions, political parties, and stakeholders who fear job losses and reduced control over national assets. Public sentiment often leans against privatisation due to concerns that assets are being sold below their value and that essential services may become costlier under private ownership.
Critics argue that privatisation deals are sometimes non-transparent, leading to corruption and favouring certain buyers, which can undermine the credibility of the process. While privatisation is intended to enhance efficiency, the immediate result can lead to job cuts and price increases, which can strain low-income households.
In certain cases, privatisation has improved operational efficiency, reduced financial losses, and encouraged private investment. Some privatised banks and telecom companies in Pakistan, for instance, have grown significantly. For some sectors, however, privatisation has not delivered the intended improvements.
Cases like PTCL’s partial privatisation have seen management disputes, and Pakistan Steel Mills remains closed despite ongoing privatisation efforts. While the government has raised revenue from privatisation, job losses and potential service cost increases have sometimes made these changes unpopular with the public.
Recently, the government is also exploring public-private partnerships as a less contentious alternative to complete privatisation process. The government’s current privatisation plan targets SOEs in energy, infrastructure, and services. However, the pace of these efforts has slowed down due to political and economic conditions. The International Monetary Fund (IMF) has also frequently included privatisation in its reform recommendations for Pakistan, pushing for reforms to address inefficiencies in loss-making SOEs.
The privatisation of SOEs in Pakistan remains a complex and contentious policy, driven by the need for economic efficiency and fiscal discipline but often hindered by political and social challenges. As the government continues to work on reforming SOEs, a more transparent and inclusive approach to privatisation or alternative models, like public-private partnerships, may help balance efficiency with public concerns and economic stability.