ISLAMABAD, Jan 14: Dr Akhtar Hasan Khan, former secretary, Planning and an eminent economist, speaking at the meeting of Pakistan Society of Development Economics here on Tuesday, urged the government to remove PSO, OGDC, PTCL, HBL and NBP from the list of privatization in order to avoid a disaster for the national interest.

In a well-researched paper presented on the second day of PSDE meeting, he warned that the privatization of these enterprises would be strategically dangerous and economically unjustifiable. “If we go along with the announced paced of privatization, our economy, which is already in recession, will suffer and we will lose our economic sovereignty,” he warned.

Moreover, he feared, IMF would demand to privatize Mangla and Tarbela dams, which would bring an utter ruin to the economy.

Stating that he was not against privatisation per se, Dr Khan said Pakistan should have followed the examples of UK and China’s and, instead of undertaking sweeping tides of privatisation conducted in a non-transparent manner, detrimental to national interest, we should have rather lured private investors to set up new industry which would have gradually reduced the size of public sector enterprises.

During the first tide of privatization conducted in 1992-94, 83 units were privatized. Out of these, only 22pc were performing better than in the pre-privatisation period, 44pc approximately the same and 34pc worse than before, according to a study of Asian Development Bank.

Dr Khan’s paper included the list of 20 units which were closed, playing havoc with the national economy. In the wake of first phase of privatization, the GDP growth rate plummeted from 6pc of 1980s to around 4pc. Among various reasons for closure of units, the main was the failure to check the creditworthiness of the purchaser, he remarked.

All the three units given to Schon group were closed. Moreover, they did not pay even the first instalment. “Messrs Saeed Qadir and Sartaj Aziz owe an explanation to the nation for the unwarranted favour shown to Schon Group and also to Tawakkil Group, if we do not doubt their integrity, to say the least,” remarked Dr Khan.

Of three privatized banks, MCB and ABL are reported to be running better. Nevertheless, the latest figures relating to the first six months of 2002 reveal that the profit declared by them was lower than that of the Habib Bank. The third privatized financial unit, Bankers Equity has since collapsed.

Turning next to the second tide of privatization conducted from July 15, 2001 to October 15, 2002, he noted that (1) sale was that of GoP “Working Interest” in six oil concessions, (2) sale of 51pc GoP stake in UBL, (3) sale of Pak Saudi Fertilizer Ltd., and (4) two capital market transactions amounting to Rs13.6 billion.

Intriguing part is that out of Rs 19.6 billion worth of privatized transactions carried out during this period, transactions worth Rs 15 billion were conducted in the last 3.5 months before handing over power to the elected representatives. This was pushed by IMF as the privatisation of all programmed public assets was part of the undertaking given to it for its latest financing facility. The name given to this “facility”, ironically enough, was “Poverty Reduction and Growth Facility”.

As a result of surrender of its working interest in oil companies, GoP lost its ability to keep watch over the quantity of oil extracted by private oil companies.

Pakistan suffered a loss of Rs17.65 billion in the sale of UBL, he observed, explaining that the government had earlier spent Rs30 billion on “structuring”. But then it was sold to Abu Dhabi and Best Way Group just a week before the national elections.

Instead of learning from our previous privatisation, the former Planning Secretary said, the government now intended to privatize major assets like PSO, OGDC, PTCL, HBL and NBP, which were highly profitable organisations. Their total profits jumped from over Rs37 billion in 2000-01 to nearly Rs39 billion in 2001-02.

As Pakistan’s largest corporate unit mentioned in Asia’s leading 500 enterprises, PSO is in competition with other foreign companies, Shell and Caltex. “If we sell PSO, foreign companies can throttle oil supply in time of emergency. Hence both economic and strategic considerations demand that PSO should not be privatized,” Dr Khan remarked.

He also opposed privatisation of HBL and NBP, fearing that it would sap the government’s ability to realise national socio- economic goals particularly in the context of advancing credit to small borrowers.