1. An Assessment Of Privatization
In Pakistan 1988-2009 & The
Prospect For The Remaining
PSEs

2. Introduction
• History of privatization
• Government consensus on the issue
• Establishment of Privatization Commission

3. Modes Of Privatization Used In
Pakistan
• Divesture through Bids
• Sale of shares through stock exchange
• Sale to modaraba companies
• Management contracts with MCs
• Management contracts with workers

4. PRE 2000
PRIVATIZATION ERA

5. • Unmanageable increase in PSEs
• Denationalization of Agro-based industries
• PSEs offered on Management Contracts

6. Privatization & Fiscal Deficit
• The stabilization and structural adjustment
programmes of IMF.
Rs. 59.6 B Receipts Rs. 2500 B Deficit

7. Privatization & Efficiency
(MANUFACTURING SECTOR)
Pre-
Privatization,
GDP, 5.44
Pre-
Privatization,
Investment,
5.55
Pre-
Privatization,
Employment,
2.1
Post-
Privatization,
GDP, 4.15
Post-
Privatization,
Investment,
1.82
Post-
Privatization,
Employment,
2.3
Pre-Privatization
Post-Privatization
GROWTHRATES

8. • The real wages have been stagnant thus indicating that
the workers have been untouched by any growth.

9. Privatization & Banking Sector
• The performance of the Muslim Commercial bank in the post
privatization period has been somewhat better than that of the Allied
Bank. However, any improvement in performance is overshadowed by
the ballooning employment cost.
Pre Paid Up
Capital, ABL,
272
Pre Paid Up
Capital, MCB,
576Post Paid Up
Capital, ABL,
1063
Post Paid Up
Capital, MCB,
1820Pre Paid Up Capital
Post Paid Up Capital
In Millions
Pre-Deposits,
ABL, 25
Pre-Deposits,
MCB, 350
Post-Deposits,
ABL, 63
Post-Deposits,
MCB, 1024
Pre-Deposits
Post-Deposits
In Billions

10. POST 2000
PRIVATIZATION ERA

11. • Terrorist activities
Stock market crashes
• Investment deteriorated

12. • The major privatization which took place
during this period included:
– Sale of GOP “Working Interest” in six oil
concessions
– Sale of 51% GOP stake in UBL
– Sale of Pak Saudi Fertilizer Ltd.
– Two capital market transactions amounting to
Rs13.6 billion.

13. Bad to Worse
• GOP sold its “Working Interest” in the oil
companies.
• Privatization of Pak Saudi Fertilizer
• Sale of UBL to Best Way Group
• Privatization of KESC
• Privatization of PTCL

14. Privatization & Employment
• Privatization neither results in lower rate of inflation nor
in the lower real prices of the products of the privatized
industries.
• WAPDA and PTA workers jobs were at stake.
– PSEs employ labor in excess from there requirement
while privatized ones get rid of them.
– Opting for capital intensive products.
– Hiring people on contract on need basis.
– Forced retirement (golden hand hake)

15. Wage rates and social
protection of the workers
• Government should not interfere in
commercial activities.
• Privatization should be done through
Stock Exchanges.
• Workers disagree with facilities provided
for workers in private sector.
• Bonuses abandoning and lack of job
security.

16. Privatization and
Investment/Employment
Projection
• Short-term decline in employment but
rising trend is projected in the future (long-
term).
• Confidence build up among investors.
• Removal of entry barriers.
• Rapid increase in investments in Private
Sector and vice versa in Public Sector.

17. Conclusion
• No significant impact on deficit reduction.
• Privatization of large banks and telecom
may have achieved the goal in 90s.
• Privatization works best in competitive
framework.
• Restructuring of PSEs resulted in layoffs.
• Huge layoffs forced government into
action.