PRIVATISATION is one international trend Pakistan is straining to emulate. There is consensus on this across the political divide, and the differences lie in the details. Privatisation has been an important component of the national economic policy since the 1980s. It gained momentum when Nawaz Sharif came to power for the first time in the early 1990s. At that time, several banks and industrial units were sold off to private investors in spite of fierce opposition and charges of corruption by the workers, not to speak of objections raised by political opponents. Governments since then followed the same policy to finance budget deficits until the process was stalled by the Supreme Court that revoked the sale of the Pakistan Steel Mills to a consortium of local and foreign investors in 2006.

In power for the third time, Nawaz Sharif has, as expected, decided to revive the process. His government plans to turn over 31 major state-owned companies to investors, both domestic and foreign, in the first phase of its privatisation programme. The government will sell its holdings in each company either to the public through stock exchanges or to strategic buyers through the direct sale of 26pc or more shares to them. The details are yet to be firmed up by the Privatisation Commission, but the management control of all the ‘privatised’ enterprises is expected to be transferred to the investors who have the ‘experience and expertise’ to run a business efficiently and profitably. By selling off public-sector enterprises, the government hopes to get rid of the losses these companies are incurring every year and, thus, cut its budget deficit. These losses are estimated at around Rs400-500bn. The privatisation of these businesses will also fulfil an IMF loan condition requiring disinvestment of 65 PSEs in the energy, transport, financial, aviation, shipping, industrial and other sectors.

Indeed, many PSEs — the national airline, railways and steel mills — are a burden on resources and in a state where they risk shutting down. Having said that, privatisation in itself does not guarantee a turnaround. It can peter out into an exercise where the family silver is sold off to benefit a chosen few. Even if it manages to silence dissent over other aspects the government must proceed carefully to avoid the charges of benefiting its loyalists. Monopolies have to be avoided, transparency ensured and, even if that appears to be out of fashion, workers’ rights guarded to avert the fate that the attempt to privatise the steel mills met with seven years ago.