A REVIEW OF PRIVATIZATION POLICIES IN PAKISTAN

9 10

Goher Fatima and Wali ur Rehman

ABSTRACT:
Privatization is one of the options with the government to enhance their production
capabilities and improve the productivity of the state-owned entities, when they are observed
to be underperformed. The current study reviewed privatization policies of Pakistan.
Privatization is commonly known as transfer of burden of production of good or services to
the private sector, by reducing the public/government control over the production facilities
either partially or fully, for efficient conduct of businesses. The study analyzed two major
impacts of privatization of state owned industries on economy of Pakistan in terms of
foreign
direct investment and employment opportunities. The results showed that positive impact of
foreign direct investment and employment opportunities. The results also explored negative
impact of privatization on the economy by creating uncertainty in the employees working in
the state-owned organizations, which have potentials to be privatized.
Key Words: Privatization, government policies, employment

1. INTRODUCTION

Privatization, a very broad term but very simply defined, is the process of transfer of the
production burden and ownership of the production facilities to the private hands through
prescribed procedures. The transfer of the ownership ultimately transfers the responsibility of
production of goods and provision of services from government to the private enterprises.
Sometimes privatization restricts government interventions in the provision of goods and
services in that industry, and sometime it is the result of a partnership between the public and
private sectors with set rates of their shares in the responsibilities.
The privatization ranges from public-private partnerships, combined venture, creation of
corporations, quasi-government enterprises.

Objective of Study:

The broad objectives of the study are as follows:

To review privatization policies of Pakistan

To investigate the impact of these policies on overall economy of Pakistan

To explains privatization procedure in detail.

Suggest some recommendations to remove the problems which created because of

privatization.

Lecturer. Department of Economics. Foundation University college of Liberal Arts and

Sciences (FUCLAS),
New Lalazar , Rawalpindi.
10

M. Phil Leading to PhD Scholar, Department of Management Sciences, Foundation

University Institute of
Engineering and Management Sciences (FUIEMS), New Lalazar-1, Rawalpindi.

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1.1 Background

Under the impetus of strong support by the international donors, Walle (1988) empirically
demonstrated that around hundred under-developed countries are engaged in the process of
privatization in order to improve their production capabilities.

In early eighties an increase in oil prices has accelerated the process of privatization in the
world. Due to inability of economies to adjust to external price shocks – led to a marked
deterioration in macroeconomic performance, as a result recovery was slow and part of the
blame was leveled at large public sectors. At the same time, both efficiency and
effectiveness
of public sector activities began to be questioned seriously by the concerned stakeholders,
which ultimately led to the privatization of public enterprises.

1.2 Objectives of Privatizations:

According to Christiansen (1989), the purpose of the sole privatization is achieved when the
ownership of the public assets is shifted to the private sector. In such case the control is
also
shifted from the government to the private hands. However, transfer of assets and production
responsibilities is termed as partial privatization when there are some leasing and franchising
arrangements involved in such practices. Privatization of state owned industries and service
organizations to the private sector are based on the following four principles:

1.2.1 Improve Efficiency:

When certain businesses and enterprises are not supported by the government owned
resources (which they take as for granted), then they are considered to operating in a
competitive environment, where they have to fight for the resources with their competitors.
Therefore, they are obliged to become competitive at home and overseas by raising their
technical standards and refining management practices. The objective of the privatization is
also to improve the operational efficiency and overall performance of entities proposed to be
privatized and to promote competition in order to reduce financial burden imposed on the
Government by public enterprises.

1.2.2 Generate Revenue:

Public sector enterprises are blessed with the facility of subsidies provided by the
government, hence a burden on the public exchequer. When they are privatized and theses
subsidies are lifted by the government, then they are forced to generate their own resources
either in the form of debt or in the form of capital investment in order to survive in the
market. In this way, privatization results in generation of revenues for these enterprises,
when
they are privatized.

1.2.3 Broad Base Ownership:

Once the enterprises are privatized and the private authorities enjoy full autonomy, then for
the sake of capital generation, they offer their shares for common public to purchase. This is
the way the ownership of these enterprises is broadened and resultantly, it prevents undue
concentration of power in certain groups and classes.

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1.2.4 Develop Capital Markets:

The privatized enterprises employ their sources and also attract external investors to invest
in
their businesses by offering good deal of offers in return. Therefore, privatization helps these
enterprises in developing good capital market throughout the country and abroad (in some
cases).

2. Privatization in Pakistan:
Recent era of privatization of the state owned enterprises in Pakistan started in 1988, this
privation was attributed to:
a) Mismanagement in both physical and human resources,
b) Inappropriate level of quality of goods and services by these enterprises,
c) Corruption across the board in the organizations, in almost all the departments i.e.
purchases, human resources and abuse of privileges, and
d) Large debt burden and financial losses due to various reasons.

The first divestiture took place in May 1990, when 10% shares of Pakistan International
Airlines (PIA) amounting to Rs. 274.00 (M) were divested, which is also reported by Fatima
(1996) in her study. Resultantly, to implement privatization policy in Pakistan a firm was
indulged to seek their recommendations on the privatization process. Accordingly, on the
basis of the recommendations of the consultancy firm, an authority was formed with the
name of National Disinvestment Authority (NDA) to examine the privatization process.
Initially, 14 enterprises (showing losses) were identified by NDA. But, unfortunately the
then
government could not substantiate their objectives, since due to political instability in the
country the government collapsed before taking any concrete steps in this regard.

Later, at the start of 1991, the government set up a commission with the name of
Privatization
Commission (PC) and a Special Committee on Privatization-chaired by the Finance
Minister.
These two authorities were delegated the powers to implement the privatization policy in a
proper way. The main task inter-alia of the Commission was to identify the public sector
enterprises which are to be privatized and giving the rationale for doing so. The other tasks
included valuing and recommending reserve prices for these enterprises, calling and
processing bids, and finely compilation of their analysis and recommendations. These two
bodies were answerable to the Cabinet Committee (CC), hence submitted their reports with
suggestions thereto. As a follow-up the Commission was also responsible for fair and
transparent transfer of the assets and resources of the privatized units from government
control to the private control. The privatization wing of the Ministry of Finance with the
support of Ministry of Law facilitated Privatization Commission on the legal aspects of the
privatization process.

The privatization policy of Pakistan was based on the following principles:

1. Privatization will be conducted for the benefit of all, not

for the privilege of a few.

2. Privatization should make local industries and services more efficient and
competitive
within Pakistan and overseas.
3. The whole procedures of privatization should be transparent.
4. In case of certain units such as major utilities or banks there will be a process of
pre-
qualification.

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2.1 Privatization Procedure

The privatization Commission followed following five steps for privatization:

2.1.1 Identification
The identification of the entities is very vital step in the privatization process, as the whole
success or failure of the privatization of that entity depends on its suitability for being
privatized. The process of identification is carried out jointly by the planning commission
and
the concerned ministry (the ministry, which controls that entity). The planning commission
had to submit a summary of the proposed transaction to its governing Board. Subsequently,
after its endorsement by the Board, it had to be submitted to the cabinet committee for
consideration and for final approval it had to be submitted to the federal Cabinet. In some
cases the Cabinet Committee or the federal Cabinet itself directed the PC for privatization of
an entity, which they deemed fit for.

2.1.2 Due Diligence

In the very next step the legal, technical and financial due diligence was carried out for each
case. This was aimed at identifying any legal encumbrances, evaluating the condition of the
assets and examining the accounts of the company in order to place on the company.

2.1.3 Pre Bid and Bid Process

After due deliberation and consideration of the values of the assets and properties of the
entities, to be privatized, PC announced Expression of Interests (EOI) in appropriate media.
This all had to be done according to the advertisement procedure laid down in the Planning
Commission Ordinance of Pakistan. The parties willing to participate in the bidding had to
submit ‘Statement of Qualification’. The authorities then evaluate the cases for their
eligibility i.e. whether they fulfill the minimum eligibility criteria or otherwise.

2.1.4 Post Bid Matters

Following the bidding and the identification of the highest bidder, the Board of the PC makes
recommendation to CCOP as to whether or not to accept the bid. Once the bid price and
bidder are approved, the PC issues a letter of acceptance (sometimes letter of intent) to the
winning bidder. The letter indicates the terms and conditions of the sales, which are the basis
of the transaction.
The whole process from advertisement to the issuance of the letter of intent takes a long
time,
due to red tapes and other bureaucratic hurdles. This delay is considered to be one of the
drawbacks of the process of the privatization. The delay results in different physiological
consequences, e.g. mental disturbances for those who works for that specific entity, these
conditions prevail during the course of the privatization. The ambiguities and uncertainties
among the employees regarding their future affect their performance, which ultimately
affects
the profitability of the organization/entity under consideration.

The logic of privatization has never been fully debated nationally. As such, its short medium
and long-term objectives and possible efficiency and equity impact have never been explicitly
defined. Privatization is essentially a doctrinaire issue.

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2.2 Modes of Privatization and Protection of Workers’ Rights

Economics Survey of Pakistan, 1991-92 lists six modes of Privatization for divestiture of
public enterprises, which are listed below:

a) Sale of public enterprises by inviting bids from private

sector.
b) Sale share of public enterprises in suitable trenches through stock exchange at a
price
per share to be determined through an evaluative process.
c) Encouraging the prospective investment managers to form modaraba companies
and
raise funds for purchasing shares.
d) Entering into a management contract with a modaraba company.

The employees union in the organization is working to protect the rights of the workers and
with an arrangement they reach to the agreement that:

a) During the first year of the privatization of the enterprises

will not lay-off any

employee.
b) Workers opting for golden handshake will be given four months salary (at the rate
of
salary last drawn) plus gratuity equal to one-month salary for each year of whole
service;
c) Workers may bid for purchase of the shares and the unit(s) and they shall be given
preference.

2.3 Current Situation of Privatization in Pakistan:

The first government of Pakistan Muslim League (N), in 1990, implemented an aggressive
privatization policy in order to improve the production capacity of the government owned
enterprises. During the first four years (1991 to 1994), around 70 enterprises were
considered
for privatization. However, by the end of 1997, around 92 transactions were carried out. At
the end of 2000, the number reached up to 106, which in monetary term reached up to
approximately US$ 2.0 billion, half of which accounted for telecom sector.

Since then while several governments have come and gone in Pakistan, there was no drastic
change in those privatization policy. The table 1 enlists the sectors in which privatization
was
carried out in Pakistan, including monetary details of the transactions:
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Table 1: Number of Units Privatized in Pakistan

Sector Number Amount (Rs. billion)

Automobile 7 1.1
Banking 4 6.2
Cement production 11 7.8
Chemical / Fertilizer 14 2.0
Energy 3 10.6
Engineering 7 0.2
Ghee Production 19 0.7
Roti Plants 15 0.1
Telecom 1 30.6
Textiles 2 0.1
Others 20 1.1
Total 103 60. 5
Source: Privatization Commission’s Annual Report (2000)

Note: Vast majority of units were sold in one transaction; in that instance the Government
conducted two-privatization transactions for the same company. Thus, by December 2000,
the number of privatized units stood at 103. While the number of transaction stood at 106.

According to the Asian Development Bank study, the overall privatization program of
Pakistan was a success in term of selling the units. It was well ahead of its regional
counterparts, both in terms of numbers of companies privatized, and the depth of the
program
in tackling more complex privatization such as those of utilities. The program had achieved,
at least partly, most of its various objectives. These included, improving efficiency of
enterprises and the economy, improving state finances, widening and deepening capital
ownership, and protecting the interests of employees.
Privatized Transaction from 1991 to June 2010
Rs (in millions)
Sr.
 Unit Name

No
Sale Price Date of

Buyer Name

Transfer
Banking and Finance
Bank
1 Allied Bank Limited
971.6 Feb-91 EMG

(51%)
2 Muslim Commercial Bank
2,420.0 Apr-91 National Group

(75%)
3 Bankers Equity (51%) 618.7 Jun-96 LTV Group
4 Habib Credit & Exchange
(70 %)
(52,500,000)
1,633.9 Jul-97 Sh. Nahyan bin
Mubarik Al-Nahyan
5 United Bank Ltd. (51%)
12,350.0 Oct-02 Consortium of Bestway

(1,549,465,680)
& Abu Dhabi Group
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6
Bank Alfalah
620.0 Dec-02
Abu Dhabi Group

(30%)(22,500,000)
7 22,409.0
Habib Bank (51%)
Dec-03
Agha Khan Fund for

Economic Development

Total 41,023.2
Capital Market Transaction
8
Muslim Commercial Bank
 563.2 Jan-01 MCB Employees-PF &

(6.8%)
Pension Fund
9
Muslim Commercial Bank
364.0 Nov-01 MCB Employees-PF &

(4.4%)
Pension Fund
10
NBP 10% shares
IPO (37.3 million
shares)
373.0 Feb-02 General Public Thru
Stock Exchange
11
Muslim Commercial Bank
664.0 Oct-02 Sale Thru CDC

(CDC)(24,024,560 shares)
12
Pakistan Oil Fields Limited
shares (CDC)(28,546,810
shares)
5,138.0 Oct-02 Sale Thru CDC
13
Attock Refinery Ltd.
shares (CDC) (10,206,000
shares)
1039.0 Jan-03 Sale Thru CDC
14
ICP Lot - A 175.0 Sep-02 ABAMCO
15
ICP Lot - B 303.0 Oct-02 PICIC
16
ICP - SEMF 787.0 Apr-03 PICIC
17
National Bank of Pakistan
10% SPO (37,303,932
shares)
782.0 Nov-02 Sale Thru CDC
18
DG Khan Cement shares
63.0 Dec-02 General Public thru

(CDC) (3,601,126 shares)

Stock Exchange
19
NBP 3.52% 3rd offer
604.0 Nov-03 General Public thru

(13,131,000 shares)
Stock Exchange
20
OGDCL 5%- IPO
6,851.0 Nov-03
General Public thru

(215,046,420 shares)
Stock Exchange
21
SSGC 10% - SPO
 1,734.0 Feb-04
General Public thru

(67,117,000 shares)
Stock Exchange
22 1,215.1 Jul-04
PIA 5.8% shares SPO General Public thru
Stock Exchange
23
PPL 15% IPO
5,632.6 Jul-04
General Public thru

(102,875,000 shares)
Stock Exchange
24
KAPCO 20% IPO
4,814.8 Apr-05
General Public thru

(160,798,500 shares)
Stock Exchange
25
UBL 4.2% IPO
1,087.2 Aug-05
General Public thru

(21,867,000 shares)
Stock Exchange
26 OGDCL 9.5% GDR
 46,963.0 Dec-06 GDR offering to

(408,588,000 Shares)
international &
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domestic institutions
27 OGDCL 0.5% SPO
2,359.6 Apr-07 General Public thru

(21,505,000 shares)
Stock Exchange
28 UBL 25% GDR
39,450.7 Jun-07 GDR offering to

(202,343,752 shares)
international &
domestic institutions
29 HBL 7.5% thru IPO
12,161.0 Oct-07 General Public thru

(51,750,000 shares)
Stock Exchange
 Total
133,124.2
Total Banking &
Finance:
174,147.4

Energy Sector
30
Mari Gas (20%) 102.4 Apr-94 Mari Gas Company Ltd.
31
Kot Addu Power
7,105.0 Jun-96 National Power

Company (26%)
32
Kot Addu Power Company
3,046.0 Nov-96 National Power

(10%)
33
Kot Addu (Escrow A/c) 900.7 Apr-02 National Power
34
SSGC LPG business 369.0 Aug-00 Caltex Oil Pak.(Pvt)
Ltd.
35
SNGPL LPG business 142.0 Oct-01 Shell Gas LPG Pakistan
36
Badin II (Revised) 503.2 Jun-02 BP Pakistan &
Occidental Pakistan
37
Adhi 618.9 May-02 Pakistan Oil Field
38
Dhurnal 161.0 May-02 Western Acquisition
39
Ratana 24.6 May-02 Western Acquisition
40
Badin I 6,433.0 Jun-02 BP Pakistan &
Occidental Pakistan
41
Turkwal 75.6 Jun-02 Attock Oil Company
42 16,415.0 May-05
NRL (51% GOP shares) Consortium of Attock
Refinery Ltd
43 15,859.7 Nov-05
KESC (73% GOP shares) Hassan Associates
Total
51,756.1
Telecommunications
44 PTCL (2%) 3,032.5 Aug-94 General Public thru
Stock Exchange
45 PTCL (10%) 27,499.0 Sep-94 Through DR form
46 26% (1.326 billion) B class
156,328.4 Jul-05 Etislat-UAE

of shares of PTCL
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47 Carrier Telephone
500.0 Oct-05 Siemens-Pakistan

Industries
Engineering Co. Ltd.
Total
187,359.9
Industrial Units
 Automobile
48 Al-Ghazi Tractors Ltd. 105.6 Nov-91 Al-Futain Industries
(Pvt) Ltd. UAE
49 National Motors Ltd. 150.4 Jan-92 Biboojee Services
50 Millat Tractors Ltd. 306.0 Jan-92 EMG
51 Baluchistan Wheels Ltd. 276.4 May-92 Abdul Qadir &
Saleem I.Kapoorwala
52 Pak Suzuki Co. Ltd. 172.0 Sep-92 Suzuki Motors
Co. Japan
53 Naya Daur Motors Ltd. 22.3 Jan-93 Farid Tawakkal &
Saleem I. Kapoorwala
54 Bolan Castings 69.2 Jun-93 EMG
Total
1,101.9
Cement
55 Maple Leaf Cement 485.7 Jan-92 Nishat Mills Ltd.
56 Pak Cement 188.9 Jan-92 Mian Jehingir Ellahi &
Ass
57 White Cement 137.5 Jan-92 Mian Jehingir Ellahi &
Associates
58 D.G Khan Cement 1,960.8 May-92 Tariq Sehgal &
Associates
59 Dandot Cement 636.7 May-92 EMG
60 Garibwal Cement 836.3 Sep-92 Haji Saifullah & Group
61 Zeal Pak Cement 239.9 Oct-92 Sardar M. Ashraf D.
Baluch
62 Kohat Cement 527.9 Oct-92 Palace Enterprises
63 Dandot Works - National
110.0 Jan-95 EMG

Cement
64 General Refractories
 18.9 Feb-96 Shah Rukh Engineering

Limited
65 Wah Cement 2,415.8 Feb-96 EMG
255.0 Nov-03
66 Associated Cement Rohri National Transport
Karachi
793.0 Jan-04
67 Thatta Cement Al-Abbas Group
68 10% additional shares-
8.3 Oct-04

Dandot Cement
EMG
69 10% additional shares-
40.7 Oct-04

Kohat Cement
EMG
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Mustehkam Cement
 3,204,.9 Nov-05
Bestway Cement

Limited
Limited
71
Javedan Cement Company
4,315.9 Aug-06
Haji Ghani Usman &

Limited
Group
Total
16,176.9
Chemical
72 National Fibres Ltd 756.6 Feb-92 Schon Group
73 Kurram Chemicals 33.8 Feb-92 Upjohn Company USA
74 Pak PVC Ltd 63.6 Jun-92 Riaz Shaffi Reysheem
75 Sind Alkalis Ltd 152.3 Oct-92 EMG
76 Antibiotics (Pvt) Ltd 24.0 Oct-92 Tesco (Pvt) Ltd.
77 Swat Elutriation 16.7 Dec-94 Sahib Sultan Enterprises
78 Nowshera PVC Co.
20.9 Feb-95 Al_syed Enterprises

Limited
79 Swat Ceramics (Pvt)
38.6 May-95 Empeiral Group

Limited
80 Ittehad Chemicals 399.5 Jul-95 Chemi Group
81 Pak Hye Oils 53.6 Jul-95 Tariq Siddique
Associates
82 Ravi Engineering Limited 5.4 Jan-96 Petrosin Products Pte
83 Nowshera Chemicals 21.2 Apr-96 Mehboob Ali Manjee
84 National Petrocarbon 21.9 Jul-96 Happy Trading
85 National Petrocarbon
2.3 Mar-02 Happy Trading

(add’l 10% shares)

86 Khuram Chemicals
6.0 Oct-03 Pfyzer Pakistan

(additional 10%)
87 10% additional shares –
26.1 Oct-04 EMG

Ittehad Chemicals
1,642.5
Engineering
88 Karachi Pipe Mills 18.9 Jan-92 Jamal Pipe Industries
89 Pioneer Steel 4.4 Feb-92 M. Usman
90 Metropolitan Steel Mills
66.7 May-92 Sardar M. Ashraf D.

Limited
Baluch
91 Pakistan Switchgear 8.9 Jun-92 EMG
92 Quality Steel 13.2 Apr-93 Marketing Enterprises
93 Textile Machinery Co 27.9 Oct-95 Mehran Industries
94 Indus Steel Pipe 42.5 Jul-97 Hussien Industries

182.5
Fertilizer
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95 Pak China Fertilizers

435.4 May-92 Schon Group

Company Limited
96 Pak Saudi Fertilizers Ltd. 7,335.9 May &
Fauji Fertilizers

Sep-02
97 Pak Saudi Fertilizers Ltd.
815.0 Sep-02 Fauji Fertilizers

(10%)
98 Pak Arab Fertilizers (Pvt)
14,125.6 May-05
Export Reliance-

Ltd. (94.8%)
Consortium
99 Pak American Fertilizers
15,949.0
Jul-06 Azgard 9

(100%)
100 Lyallpur Chemical &
280.2
Dec-06 Al Hamd Chemcial

Fertilizers
(Pvt) Limited
101 Hazara Phosphate
1,340.00.2
Nov-08 Pak American

Fertilizers Limited
Fertilizers
Total
40,281.1
Ghee
102 Fazal Vegetable Ghee 21.2 Sep-91 Mian Mohammad Shah
103 Associated Industries 152.0 Feb-92 Mehmoob Abu-er-Rub
104 Sh Fazal Rehman 64.3 Apr-92 Rose Ghee Mills
105 Sh Fazal Rehman(addl-
2.3 May-05 Rose Ghee Mills

10% shares)
106 Kakakhel Industries 55.3 May-92 Mehmoob Abu-er-Rub
107 United Industries 15.5 May-92 A. Akbar Muggo
108 Haripur Vegetable Oil 30.1 Jul-92 Malik Naseer & Assoc.
109 Bara Ghee Mills 27.8 Jul-92 Dawood Khan
110 Hydari Industries - Aug-92 EMG
111 Chiltan Ghee Mills 42.5 Sep-92 Baluchistan Trading Co.
112 Wazir Ali Industries 31.9 Dec-92 Treat Corporation
113 Asaf Industries (Pvt)
11.4 Jan-93 Muzafar Ali Isani

Limited
114 Khyber Vegetable 8.0 Jan-93 Haji A. Majid & Co.
115 Suraj Vegetable Ghee
10.8 Jan-93 Trade Lines

Industries
116 Crescent Factories
46.0 Jan-93 S. J. Industries

Vegetable Ghee Mills

117 Bengal Vegetable 19.1 Mar-93 EMG
118 A & B Oil Industries
28.5 Mar-93 Al-Hashmi Brothers

Limited
119 Dargai Vegetable Ghee
 26.2 Nov-97 Gul Cooking Oil

Industries
Industries
120 Punjab Veg. Ghee 18.7 May-99 Canal Associates
121 Burma Oil 20.1 Jan-00 Home Products Intl
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122 E&M Oil Mills 94.0 Jul-02 Star Cotton Corp. Ltd.
123 Maqbool Oil Company
27.6 Jul-02 Madina Enterprises

Ltd.
80.7 May-04
124 Kohinoor Oil Mills Iqbal Khan
125 United Industries Limited 7.7 Sep-05 A. Akbar Muggo

841.7
Rice
126 Sheikhupura 28.0 May-92 Contrast Pvt Ld.
127 Faizabad 21.2 May-92 Packages Ltd.
128 Siranwali 16.2 Jul-92 Enkay Enterprises
129 Hafizabad 20.0 Sep-92 Pak Pearl Rice Mills
130 Eminabad 24.1 Nov-92 Pak Arab Food
Industries
131 Dhaunkel 79.2 Jun-93 Dhonda Pakistan Pvt
Ltd.
132 Mabarikpur 14.4 Nov-93 Maktex (Pvt) Ltd.
133 Shikarpur 32.5 Mar-96 Afzaal Ahmad

235.6
Roti Plants
134 Gulberg, Lahore 8.7 Jan-92 Packages Ltd.
135 Peshawar 2.6 Jan-92 Saleem Group of Ind
136 Head Office, Lahore 10.2 Jan-92 Hajra Textile Mills
137 Hyderabad 2.6 Jan-92 Utility Stores Corp.
138 Faisalabad 11.5 Jan-92 Azad Ahmad
139 Bahawalpur 1.6 Feb-92 Utility Stores Corp.
140 Multan 2.5 Feb-92 Utility Stores Corp.
141 Quetta 4.8 Feb-92 Utility Stores Corp.
142 Islamabad 3.6 Mar-92 Utility Stores Corp.
143 Taimuria, Karachi 9.2 Jun-92 Spot Light Printers
144 SITE, Karachi 5.1 Sep-92 Specialty Printers
145 Multan Road, Lahore 3.5 Dec-92 Utility Stores Corp.
146 Korangi, Karachi 4.6 Apr-93 Utility Stores Corp.
147 Mughalpura, Lahore - Jun-96 Pakistan Railways
148 Gulshan-e-Iqbal, Karachi 20.2 Mar-98 Ambreen Industries

90.7
Textile
149 Quaidabad Woollen Mills 85.5 Jan-93 Jehingir Awan
Associates
150 Cotton Ginning Factory 1.2 Jun-95 Hamid Mirza
151 Bolan Textile Mills 128.0 Oct-05 Sadaf Enterprises
152 156.0
Lasbella Textile Mills Nov-06 Raees Ahmed

370.7
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Total (all Industrial

Units)
60,923.6

Newspapers
153 N.P.T Building 185.0 Oct-93 Army Welfare Trust
154 Mashriq – Peshawar 26.6 Jun-95 Syed Tajmir Shah
155 Mashriq – Quetta 6.2 Jan-96 EMG
156 Progressive Papers Ltd. 46.1 May-96 Mian Saifu-ur-Rahman
157 Mashriq – Karachi 6.7 Aug-96 EMG

270.6
Tourism
158 Cecil's Hotel 190.9 Jun-98 Imperial Builders
159 Federal Lodges - 1- 4 39.2 Jan-99 Hussain Global Assoc.
160 Dean's Hotel 364.0 Dec-99 Shahid Gul & Partners
161 Falleti's Hotel Lahore 1,211.0 Jul-04 4B Marketing
Total 1,805.1
Others
162 Makerwal Collieries 6.1 Jul-95 Ghani Group o
f

Industries
163 National Tubewell Const
18.6 Sep-99 Through Auction

Corp
164 Duty Free Shops 12.5 Sep-99 Weitnaur Holding Ltd.
165 Republic Motors (Plot) 6.3 Nov-99 Muhammad Mushtaq
166 Al Haroon Building
110.0 Sep-02 LG Group

Karachi
167
International Advertising
5.0 Apr-05 EMG

(Pvt) Ltd.

158.5
Grand Total (1991 to
June 2010)
476,421.2

Source: Privatization Commission of Pakistan

3. CONCLUSIONS

The present search shows that privatization has not as much benefited as it should be. In
privatization prices, nether labor leader nor any social partner were involved by the
government in any decisions making process with respect to privatization policy.

From the analysis, it appears that the government’s revenue maximization objective leading
to the adversely affected the state firms to the highest bidder irrespective of the merit of the
buyer has adversely affected the state of industry and imposed a high cost in terms of jobs
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losses. Attention therefore, needs to be focused on the manner in which privatization is

proceeded with.

Privatization has failed to corroborate the hypothesis that public enterprises inefficient while
private enterprises are efficient. Many of the privatized units are in deep financial trouble;
some have failed to pay the full purchase price to the privatization commission.

The Government only criteria were to sell out the unit to the highest bidder, irrespective of
the enterprenural or manager capacity of the buyers affected badly the privatized unit. In
many cases, private parties have obtained entire for just entire the value of land and
inventories. Many of them had neither the capacity nor the intention to operate the plants.

Pre qualification if potential buyers were ruled out, as it was likely to show down the process
and reduce revenue receipts. It appears, therefore, that the manner in which privatization has
occurred has perhaps cost the country, and labor, dearly in terms of de-industrialization.

One of the serious aspect of the privatization is that these units are public monopolies and
their privatization are turning them into private monopolies which could have serious effect
in long run, as such units could affect the political system of the country.

The privation has rapidly deteriorated conditions of job market. The entrenchment
employees
are now either working on contract basis in the same enterprises or else where in private
sector on comparable low wages.

The study shows that many of those employees who opted for golden handshake have
wasted
their money in business due to neither experience nor training in the same trade. Beside, a
large number of employees have lost their money in social activities such as marriages of the
sons / daughters, construction / repair / extension of houses, loan to the relatives etc. without
thinking for their career.

The privatization of few units have created, ethnic problems in the local communities, as a
few buyers are from other areas, which have employed labor from their native town, while
ignoring the local communities.

The process of privatization has generated adverse on wages and benefits. The losses in jobs
market and more unemployment had resulted in deterioration of workers bargaining position.
Unemployed displaced workers are willing to work for less than before wages and benefits.

Privatization has almost finished the unions. The existing unions are toothless. The main
reason for that is the reduced strength of its member and hiring of new employees on
contract
basis. Better promotion is only provided to those workers who keep new owners happy.

4. RECOMMENDATIONS

1.

The government should provide legal cover to protect at least the basic rights of all
contract and permanent employees.
2. The government should involve regional trade in the
privatization of the provincial
units.
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3. The government should provide business related

training golden handshake
retrenched employees, so that they could start their own small-scale business young
educated retrenched employees should be trained in IT, basic computers training
scheme of self-emplacements, etc. beside, soft loans should also be provided to them
so that they could start their won small scale business.

4. The government should restrict the buyers to give

preference to the local communities
in new recruitment, to avoid frustration in the locals.
5. The government should follow the pre-qualification
criteria to avoid the selling of
public enterprises to in experience buyers.
6. The Government should strictly follow the minimum
wages package of labor
announced by the government.
7. Due to privatization, jobs market has been disturbed.
The government should find out
ways and means for creating more jobs opportunities for the retrenched employees as
well as for the youth.