KARACHI, June 17: The Privatization Commission is proposing to the government to institute a separate and independent poverty alleviation fund based on 10 per cent of the privatization proceeds.
“A few cabinet ministers have discussed the idea informally amongst themselves and would take up formally with the Cabinet Committee on Privatisation headed by the Prime Minister in near future,” a well placed and authoritative source told Dawn. Once cleared by the CCoP, the proposal will come up before the cabinet, which would give it formal shape.
The proposed fund managers will design their own projects and will keep the National Assembly and the Senate informed about the investment and the results of the funded projects.
Under the Privatization Law 2000, 10 per cent of the privatisation proceeds are to be utilised for the poverty alleviation and 90 per cent goes towards debt clearance. The 05-06 budget show Rs20 billion privatization proceeds as government revenue which many law practitioners and constitutional experts believe is illegal and unconstitutional.
Legal practitioners say that the Privatization Commission should give a yearly account of the proceeds it has obtained and inform the people about the clearance of domestic and foreign debts and specific poverty alleviation projects in which its money has been put.
A full disclosure of the proceeds being obtained from privatization of big and small public enterprises and the investment of these funds in the two specific channels identified in the Privatization Law has become all the more relevant and pressing when public auction of a giant telecom enterprise is due on Saturday and a decision on disinvestment of the monopoly utility the Karachi Electric Supply Corporation is also being taken on Saturday by the Cabinet Committee on the Privatization.
In last more than 17 years — since 1989 when Benazir government divested a very small chunk of PIA shares and in 1991 when the Muslim Commercial Bank was auctioned in a controversial transaction—more than 140 public sector units have been privatized partly or wholly fetching about Rs145 billion.
But never for once, the successive governments during all these periods from 1988 to 2005, informed the people of the spending of the privatization proceeds. Questions were raised with the State Bank of Pakistan and with the ministers on different occasions but these remained mostly unanswered.
A pet answer is that the proceeds of the privatization are deposited with the State Bank of Pakistan from where it goes into National Consolidated Fund and the federal government then utilizes it for debt clearance and on poverty alleviation projects. “How do we know which particular domestic or foreign debt has been cleared from the proceeds of the privatization?” the source in Privatisation Commission was asked who replied that the Finance Ministry could only provide answer to this question.
Ironically, none of the legislators — in Senate or National Assembly — during last 17 years or so ever raised this question to know as to how the liquidation of national assets have contributed in debt clearance and poverty reduction.
Many in the government share the fears of squandering away of the privatisation proceeds but insist that it is not well founded so far as their government is concerned as theirs is the “responsible and fiscally prudent government”.
Since 1991 when privatization process picked up as many as seven banks and financial institutions have been divested of the majority shareholdings that generated more than Rs41 billion. Public offering of 21 enterprises in stock exchange brought about Rs19.43 billion.
Privatization of energy sector has provided about Rs21 billion and 12 per cent divesture of PTCL shares in 1994 generated Rs 30.5 billion.
More than Rs1 billion were obtained from sale of seven automobile companies, Rs8.50 billion from 12 cement plants, Rs1.67 billion from 14 chemical plants, Rs179 million from six engineering factories, Rs8.58 billion from three fertiliser plants, more than Rs836 million from 22 ghee and oil factories and as many as about 25 other units.
Neither the Commission nor the government has ever informed the public on the performance of the privatized business. There is no information on how many of the privatized industrial units are still in business?
Market reports suggest that the sponsors were mostly interested in the real estate worth of the property they bought rather than the revival of the enterprises.
All these information is vital when seen in perspective of what had happened on the privatization scene.
Three former chairmen of the Commission remained in jail, as many as a dozen presidents and senior executives of the privatized banks and financial institutions also went to jail or have fled from the country.
A few are still outside the country after having been declared absconders.
