The privatisation of major public sector units, in the doldrums for some months, may now be pushed back further due to a variety of factors.

These snags are internal and external and political as well as legal. With the presidential and general elections due in weeks and months, privatisation of major units like the PSO, the two gas distribution companies, the State Life Insurance Company and the NIT has to await a clear political weather.

Externally, there is a bank credit crunch in the western world, and capital for new projects is not readily available. And it is costlier too following the rise in interest rates.

The Gulf oil states are, however, investing both in the West and the East. But some of the investors are facing problems in Pakistan. The Pakistan Steel sold to a Saudi investor was cancelled following intervention of the Supreme Court and another Saudi party which invested in the KESC is facing serious trouble because of frequent power failures. Prime Minister Shaukat Aziz has also hinted at canceling the agreement if the company failed to ensure steady supply of power. In fact, the Saudi party came in after the first bidder had opted out of the deal.

The Gulf banks in Pakistan are flourishing and earning large profits and their Islamic banking side is also growing fast. The Supreme Court’s admonition of the Privatisation Commission for showing ‘indecent haste’ in the privatisation of Pakistan Steel is making the government and the Privatisation Commission think twice before coming up with the privatisation of larger units, and that has also encouraged litigation against new privatisation moves by the general public.

A sub-committee of the standing committee of the National Assembly on petroleum and natural resources has strongly opposed the privatisation of PSO and come up with numerous allegations of malpractices against the PSO management and the ministry of petroleum. It talks of a thousand managerial posts created in the PSO and manifold increase in salaries on the basis of nepotism and favouritism. It also says the ministry of defence is opposed to privatisation of PSO as a strategic unit.

Earlier, the standing committee of finance of the Senate had opposed privatisation of the NIT and had said the move was meant to benefit a few big brokers. The privatisation ministry has a new minister Wasi Zafar now, who is a square peg in a round whole. And the former law minister has been unfamiliar with the intricacies of privatisation. He has been accommodated in this job for political expediency.

The ministry is to have a new secretary following the tragic death in a car accident of the former secretary in Saudi Arabia. The new secretary has to come up and steady the situation before suggesting the next moves.

The Privatisation Commission earned Rs80 billion through privatisation deals in the last financial year - Rs5 billion above the target of Rs75 billion and it has set a target of Rs75 billion for the current year as well. But it may hardly earn anything during the first half of the year except what may come through the sale of GDR through Habib Bank. There may be yet another change in the minister of privatisation as a caretaker ministry comes in to office succeeding the present government.

After that there will be the general elections by the end of the year and the privatisation ministry may get yet another minister. And what kind of privatisation he will come up with may depend on the policy of his political party or the ruling coalition then. In a coalition government different parties may have varying approaches to privatisation and the process may be stymied further.

So, the future of privatisation is clearly in a state of prolonged suspense. Meanwhile, the political uncertainty has begun telling on the market value of its Euro bond. The Euro bond price has come down by over 14 per cent since May last ---from $100 to $85.65. It is a sharp fall and those who buy the bonds now get a higher interest rate.

An increase in portfolio investment by foreigners has been reported. But that is a come and go affair. If the share prices rise they can sell and move out or they can do the same if the share price falls so that they can avoid larger losses. The JETRO, the Japanese export association, has spoken of political uncertainty affecting the economy.

The units to be privatised now are those in which the people are deeply interested or involved financially. The NIT and State Life have much of the savings of the people and they are very much interested in the future management of these organisations.

Sui Southern and Sui Northern Gas Companies have millions of customers interested in the future management of the organisations. They would oppose their privatisation, particularly if unsuitable parties come up.

The profit- making PSO share a market share of 70 per cent. And the people are concerned not only with the prices of fuel but also the quality of service. They would not want the company to go into the wrong hands or under cavalier management.

Also to be privatised are 26 restaurants and motels in whose effective functioning the people are interested.

Meanwhile, the World Bank and the Asian Development Bank continue to urge early privatisation of major state enterprises, but they will have to wait for the outcome of the elections and the emergence of a new government.

The government can earn some money by selling general depositary reserves (GDR) and other minority shares of companies prior to their privatisation.

If a coalition government emerges after the elections, the parties comprising the government may have different approaches towards privatisation. Harmonising them in to a simple, operationally effective policy can be difficult. And there can be strong opposition to liquidating the highly profitable companies like the PSO and other major public sector outfits.