PRIVATISATION is facing resistance because many are not convinced of its efficacy and benefits. Thus, a more unbiased view is required to analyse its purported benefits and effect on national interests before divesting large state-owned enterprises.

The incumbent government privatised many state enterprises in its last tenure. However, the privatisation process lacked transparency, benefitted only a few and resulted in emergence of cartels much to the detriment of national economy and the general public.

Also, it was not clear how the privatisation proceeds were used such as for retiring national debt or meeting government’s non-developmental expenditure.

A major issue, always ignored, is to consider is the point of human skills. Generally our private sector does not spend on human resource training and development and usually draws on large SOEs for trained manpower. Large SOEs are big reservoirs of various trade skills developed at government’s expense with taxpayers money.

No value is put on the tacit knowledge and expertise residing in large state-owned enterprises and their contribution to the national growth and job opportunities generated abroad

No value is put on the tacit knowledge and expertise residing in large SOEs and their contribution to the national growth and job opportunities generated abroad.

One instance is Descon which benefited from trained manpower of Heavy Mechanical Complex. Similarly, Middle-East airlines engaged PIA-trained engineers, pilots, technicians and managers in their infancy. That large SOEs are a source of trained manpower, should be kept in mind while privatising them.

The private sector is mostly engaged in service industry. For instance, all mobile firms are service providers but we are not privy to their engineering capabilities.

Similarly, the large automobile assemblers (not manufacturers), who are making fat profits each year, have made very limited investment in local engineering capabilities.

Safeguards, if any in place, by the government against profiteering by the private sector were flouted with impunity during the recent PIA crisis, when the private airlines jacked up their fares.

While oil prices have fallen dramatically, we yet have to see any of its effect on the airline tickets, cement and other commodities of daily uses. Then, privatisation would inevitably lead to layoffs resulting in unemployment, so, how the government is proposing to deal with it is not known yet.

While the government is trying to sell the benefits of privatisation to the general public, it does not seem to be addressing the ill-effects of privatisation.

However, it needs to be accepted that public money cannot be squandered away on keeping loss-making large SOEs afloat, but the long-term national interests also cannot be overlooked.

Thus, a fresh approach has to be evo9lved for the benefit of general public, state SOEs and strategic national interests.

In the present world, the technological prowess of large SOEs should be protected and upgraded while their services may be privatised to reduce loss and improve efficiency and customer service.

For instance ticketing, catering and other customer services jobs of PIA may be privatised but its engineering capabilities should be retained and upgraded by the government.

However, to discourage cartelisation, an SOE may be sold to different companies so that there is no single owner. For example, ticketing segment of PIA may be divided into Karachi, Quetta, Lahore, Rawalpindi and Peshawar regions and sold to different companies.

Such a step would also ensure that buyer-companies are financially capable of upgrading their infrastructure, expanding and managing the business efficiently.

Further, privatisation should include a clause stipulating that a part of operating profits of the privatised segments of SOEs will go to the maintenance and upgrading of infrastructure.

This clause would ensure that customers get a fair deal for their money and the workers in the private unit get trained on latest technologies and techniques.

Thus, a part of the revenue collected by the privatised Discos should go to the maintenance and upgrading of transmission and distribution infrastructure.

Published in Dawn, Business & Finance weekly, March 7th, 2016