WEB DESK: The Cabinet Committee on Privatisation (CCoP) headed by Finance Minister Ishaq Dar on 29th May this year decided to remove Pak-Arab Refinery Corporation (Parco) – with a 60 percent share held by the government of Pakistan and 40 percent by JV Abu Dhabi – from the list of entities for early implementation of privatisation programme.
The process for final approval entailed the submission of the proposal by the Ministry of Petroleum and Natural Resources with an appropriate rationale to the Privatisation Commission (PC) which, after reportedly a careful review, approved the submission and on sent it to the CCoP for a final decision.
The crucial question is: what was the rationale provided by the Ministry of Petroleum and Natural Resources that, after careful deliberation, swayed the PC to recommend to CCoP to delist Parco from the privatisation list? The reason given by Secretary Ministry of Petroleum and Natural Resources to continue to maintain the government’s shareholding in Parco was inexplicably that it was a profitable entity.
The Secretary may have been unaware of various divestment decisions taken by the PC during the past three years which led to divestment of government holdings in four profitable ventures; however, the Chairman of the Privatisation Commission, Mohammad Zubair, was surely not only aware of such divestments but also presented compelling reasons for such divestments.
An example is the sale of 42.5 percent stake in Habib Bank at 168 rupees (about 1.68 dollars) per share after a successful book-building exercise during the first half of 2015 with Zubair maintaining at the time that, “it was an international and domestic offering and we received a tremendous response from both the markets. Pakistan will be richer by around over a billion dollars due to this transaction and the bulk of money, more than 764 million dollars, is in foreign exchange.”
Thus Parco’s profitability should not logically have been used as a justification for not offering its shares on the market. The PML-N’s 2013 election manifesto refers to the sale/divestment of those public sector entities that are running into losses but only after the entity has been restructured and turned into a profit-making entity so that the revenue generated from the sale is maximized.
There is ample evidence in this country to conclude that the pervasive policy of nepotism and corruption within government render state-owned entities – fully owned or in partnership – poor performers requiring, over time, ever larger bailout packages. Of concern to any government, is not only poor service provided by an entity that leads to considerable public angst through its routine dealings with the general public, but also, a steadily rising drain on the national exchequer that requires billions of annual tax rupee injections to keep it afloat.
Thus disabling the government from using the money for more constructive purposes. It is unfortunate that failure to adhere to one policy accounts for ad hoc decisions that on occasion gets challenged in the courts of law. It also spreads the perception that the government is engaged in non-transparent decision-making. To further complicate decision-making in this country, the Prime Minister frequently takes a decision that is at odds with what the relevant ministry has suggested without providing any rationale.
For instance, the Information Technology Ministry had reportedly opposed the auction for remaining 3G licence this month on the basis that the climate was not conducive – a suggestion over-ruled by the Prime Minister. Business Recorder has reported that the Prime Minister has put all privatisation on hold and it is unclear whether the petroleum ministry’s submission, the PC and the CCoP approvals were merely rubber stamping the directive of the Prime Minister.
To conclude, it is critical for the government to adhere to one policy and in the event that it does not do so it needs to provide compelling reasons to allay legitimate concerns of transparency and accountability.-Business Recorder