Results 1 to 1 of 1
Dec 22nd, 2008, 02:37 AM #1----
SENSELESS Privatization IN PAKISTAN
LOOT SALE MELLA
3000billions Rupees (US$42 billion) worth of corruption in Privatization process during1985 to 2008
The objectives of privatization are not much different from those in other countries of the world. According to Kh. Muhammad Asif, ex-Chairman Privatisation Commission,in Nawaz sharif 2nd tenure the government programmed for privatization is based on “the principle of reducing its direct participation in commercial activities” and ensuring “equity and economic justice”
We will see the debt reducing, equity and economic justice in privatization process in Pakistan from 1985 to 2008 according to the statement of Mr. clean looting and plundering of national assets by East India company style. Corruption is a standard feature of privatization and contracting-out. Naturally so—the profits to be extracted from a privatized service make it worth investing in a bribe to increase the chance of winning a contract. The slogan of 22 families and the cry against concentration of industrial wealth in the 1960s, the Government should have learnt from the history and evolved a prudent policy one unit for one party. Privatization in Pakistan was not Transparent but smacked of cronyism and corruption. The leading cartels were created after 1985 to 2008 privatization in Pakistan. Oil cartel based on 10 oil companies, Brokerage cartel based on 4 groups, Auto mobile cartel based on 3 companies, Sugar cartel based on 24 companies, Cement cartel based on 10 companies Food and beverage cartel 12 companies, Fertilizers cartel based on 4 group, banking cartel based on 10 group. If we go along with the announced pace of privatization our economy, which already in recession will suffer and we will lose our economic sovereignty
The concept of privatization is not new to the policy makers of this country. It may be traced as back as in 50s, when Pakistan Industrial Development Corporation (PIDC) was established in 1952 to boost up the industrial development in the country. This premier Corporation established over 50 industrial undertakings in the length and breadth of the country and after their successful operation and management, these units were transferred from the public to the private sector. The tide of nationalization, which swept the whole economy in the first half of 70s, was reversed in 1977. The privatisation of State Owned Enterprises (SOE) became an important instrument of economic policy of the government in late 80s. However, it was in 1991 that privatisation process in Pakistan became effective. The general perception that privatization result in higher level of efficiency is not true in case of Pakistan. Privatization has caused social development slow down. The pre-privatization period (1981-1991) witnessed an annual average growth rate of 6.7 % of GDP while it went down to 4.4 % during privatization period (1991-2001).Two major objectives of privatization in Pakistan; debt-servicing and poverty alleviation have not been achieved. The total external debt rose from US $ 23.363 billion in 1991 to $ 40 billion in Dec 2007. The rapid depletion of reserves is disturbing for the government as it increased external debt to $46 billion. The country's foreign debt has swelled by $10.5 billion in the past six years to the current $45.9 billion. The reports of plundering of privatization money are also published. In July 2002, the Public Accounts Committee (PAC) had detected a massive sum of Rs. 80 billion missing, collected from privatization, when it was disclosed that this money was not used for the debt retirement purpose. In addition to it, indiscriminate use of billions of rupees collected from the privatization money on consultant salaries and legal experts also raised troubling questions that who was actually benefiting from the whole privatization process after laying off at least one million of workers. The PAC also learnt that consultants and advisors generally hired by the PC are heavily paid. As much as Rs.5 billion were spent on the consultants, advisors etc. In 1992 the parliament of Pakistan passed a law . The Protection of Economic Reforms Act, 1992 provided confidence to the potential investors. It definitely served as favoritism to the privatisation process, among other things; it stated in unequivocal terms that a privatised unit cannot be taken back by the government for any reason whatsoever. Although this law has not been repealed for future privatisations, the new PC Ordinance 2000 has diluted its effect.
Third World privatizes and dismantlers of the Government Control over public sector's enterprises. Despite the earlier widespread recognition of the need for increased State participation in the Third World countries privatization initiatives have become increasingly popular in the recent years. The government has accepted one of the major conditions of the IMF in 1988 that entire privatization proceeds will be used for debt retirement. 1989, interestingly, by the then-Pakistan People’s Party (PPP) government on the alleged dictates of the International Monetary Fund (IMF) and the World Bank (WB). This was part of the overall programme of neo-liberal economic policies of the “free market economy” imposed by the IMF and the WB .Government of Pakistan during 1990s after being hit by economic downturn was forced to adopt Structural Adjustment Program (SAP) under IMF to reform economy suffering from macroeconomic instability. Under the SAP, it adopted the policy of market liberalization, privatization and deregulation.In 1999 it was pushed by IMF as the privatization of all programmed public assets was part of the undertaking given to the Fund for its latest financing facility under The name of Poverty Reduction and Growth Facility (PRGF). According to the Privatization Commission Ordinance 2000, 90 percent of the proceeds are spent for debt servicing and 10 percent go to poverty alleviation programs. But the privatization proceeds are reportedly misused by successive regimes. If we go along with the Announced pace of privatization our economy, which already in recession will Suffer and we will lose our economic sovereignty. Moreover, IMF’s next demand Will be to privatize Mangla and Tarbela dams, which would bring an utter ruin to The economy. Since 1985 till December 2008, Government of Pakistan had completed or approved 184 transactions at gross sale price of Rs. 495.241 billion in the last 18 years. The sale of 26 per cent PTCL shares in 2006 alone fetched $2.5 billion. An astounding 140 privatized enterprises out of total 184 have been collapsed.
There has been massive corruption during privatization process in Pakistan from 1985 until 2008. It is very clear that the privatization process has not been proved as a key to economic development as was claimed by the different government from 1988 to 2008, but instead a total disaster for the economy of Pakistan. The favourable
Fiscal impact of privatization is expected from the sale proceeds being used to Retire national debt, as well as elimination of losses of the public sector units as the losses were being financed from the budget. That the public enterprises after nationalization in 1973 doubled the payment of their taxes as compared to the pre-nationalization period. Moreover, if the public sector enterprises are making profit and giving the government return higher than the rate at which it is borrowing from the market, the privatization of profitable enterprises would have an adverse impact on the budget. Privatization is to encourage direct foreign investment. The direct foreign investment in profitable public units is not likely to be beneficial for the economy, as against the benefit of an initial purchase price; one has to calculate the recurring remittance of profit in foreign exchange for years and decades to come. Direct foreign investment therefore should be attracted by policy and design into new and risky ventures rather than through the purchase of profitable enterprises
Privatization is a political weapon in the hands of the capitalists and IMF and World Bank. It is not just an economic attack but a political attack as well. It stops the growth of social, political and class based consciousness. It reduces the social capital and increase the private capital and big cartels. Instead of social need, it creates and increase the private greed, bad gesture and conflict of interest and class based division in society
Pakistan along with other developing countries followed the activist role for the state in industrialization and the rate of industrial growth in Pakistan has been very high. The main thrust for privatization is the belief that private sector units are more efficient than public sector units. This is not true across the board. On the other hand it is often correctly claimed that due to political interference and over-staffing, the efficiency of the public sector units is reduced. The valuable public assets was sold at throw away prices and caused a huge loss to the national assets. It was not observed that privatization should avoid crony capitalism as like in Chile and Argentina, it has been Associated with giving away expensive public assets at cheap rates to political cronies in Pakistan. The net beneficiaries of privatization are always the global vested interests and their local agents and henchmen who get hefty commissions and kickbacks for these shoddy deals while the net sufferers are the poor people of Pakistan
In July 1977, the new government introduced the policies of denationalisation, disinvestment and decentralisation to restore the confidence of private investors. As a part of these policies, the government announced denationalisation of around 2000 Agro-based industries, in September, 1977. Apart from that, the government offered a number of SOEs on Management Contract and introduced performance signalling In September 1978, Transfer of Managed Establishment Order, was promulgated, which empowered the Federal Government to offer to the former owners of nationalised industries, the shares or proprietary interest in acquiring their establishments Zia set up a Commission headed by PICIC Chairman N M Uqaili to look into the state of the State enterprises which recommended that govt. should denationalize sick units. Three units namely Ittefaq Foundary, Nowshera Engineering and Hilal Vegetables were returned to the previous owners while cement and fertilizers which were the monopoly of the govt. were opened to the private sector. Vegetable Ghee Denationalization Order was promulgated to denationalize cooking oil factories but the move was opposed tooth and nail by the bureaucracy which was heading the nationalized units. In early 1985, a Cabinet Committee was set up under the directive of the then Prime Minister to consider and identify units (which produced simple technology products and were running into loss) for disinvestment to private sector. The Cabinet Disinvestment Committee had the following composition: a) Minister For Finance Chairman. b) Minister For Production Member c) Minister For Industries Member
In Pakistan there was 8 tide of privatization from 1977 to 2008; the Ninth started in Pakistan by privatization of 3 units by PPP led Government from17th November 2008. Privatization that process in Pakistan was started in 1988; As Chief Minister Punjab, Nawaz Sharif presided over the liquidation/ privatization of several units of Punjab Industrial and Development Board (PIDC) like Pasrur Sugar Mills, Samundri Sugar, Rahwali Sugar, Paras Textile, Harapa Textile and Ghazi Textile. How and on what prices these units were sold is still a secret but according to Company Review in the daily DAWN in May 1991, Pasrur Sugar Mills was sold to United Sugar Mills of United group for a " token price of Rs one only".
Samundri Sugar Mills was sold to Monoos and Rahwali Sugar to a Muslim League politician Sheikh Mansoor,owner of industrial cooperative which was bankrupt in 1993 following single line advertisement in newspapers under the caption, " Bids invited for Rahwali Sugar Mills". The recklessness and favoritism shown in privatization of the PIDB units by Chief Minister Nawaz Sharif was to become the hallmark of his privatization as Prime Minister. 2008 Now khadama allay Punjab starting new phase of nationalization of public transport company going to start in Punjab.
British Prime Minister from 1979-90 Margaret Thatcher carried out one of the most successful privatization programme under which nearly four dozen govt. entities including British Steel, British Airways, the telephone system, water, electric and gas companies, the coal mines and the railroads were sold for nearly 100 billion dollars. Her promise to “roll back the frontier of the State" got the fancy of many world leaders. Both Benazir who ruled Islamabad as prime minister in 1988 and Nawaz Sharif who was the uncrowned King of Punjab during Bhutto's rule started peddling privatization as the linchpin of their economic agenda.
While privatization was touted and initiated by the military dictator Zia, it would actually pick up speed under Benazir Bhutto in 1988. It was her administration that consolidated the different privatization committees, and embarked on the trio of 'liberalization, privatization, and deregulation' the new government of Benazir Bhutto appointed a British firm M/s N.M. Rothschild, as consultants, to undertake a study on privatization strategy and selection of prospective candidates. In its first term, Benazir govt. tried to privatize Sui Southern Gas Company and engaged a British Consultant Morgan Grenfell who were paid US $ 39,431 and a Pakistani Consultant Sidat Hyder Aslam was paid Rs 4,20,000. However after considerable spade work, proposal to privatize Sui Southern was dropped and it was decided that 10% shares of PIA, 30-40% shares of Pak-Saudi Fertilizer and 60% shares of MCB will be privatized. The govt. however could not carry out the proposed plan and only 10% shares of PIA were divested before Benazir was dismissed on August 5,1990 giving way to the first Nawaz Sharif government. The consultants submitted their report to the government in May 1989. Pakistan. By"Wide Spread Ownership" the consultants meant development of Pakistan's capital markets. After analysis of more than 50 companies, the consultants short-listed seven companies as potential candidates for widespread offers.These included Habib Bank, Muslim Commercial Bank Pakistan National Shipping Corporation (PNSC), Pakistan International Airlines Corporation (PIAC). Pakistan State Oil (PSO), Sui Southern Gas Company (SSGC) and Sui Northern Gas Pipelines Ltd (SNGPL). The government of Benazir Bhutto had not enough time to privatize the identified units as it was sacked on charges of corruption in early 90s
The 3rd tide is from 1992 to 1994 in this period assets worth Rs.120 billion were divested. 1992 Mansha and his associates walked away with MCB and five cement plants, Schon group got Pak-China Fertilizer and National Fibre, Tawakkal got Baluchistan Wheels and Naya Daur Motors while Bibojee group of Habib Ullah Khattak got back the National Motors (Originally Gandhara Motors). An unknown person Sikandar Jatoi was successful in bidding for Metropolitan Steel, Zeal Pak Cement and Shikarpur Rice Moreover; the most tragic consequence of privatization was the closure of Naya Daur Motor, Dandot Cement, Zeal Pak Cement ,National Cement ,General Refractories ,Pak PVC ,Swat Elutriation Nowshera PVC , Nowshera Chemicals ,Pak China Fertilizer, Karachi Pipe Mills, Metropolitan Steel,Pak Switchgeage, Quality Steel Indus Steel Pipe, Fazal Veg. Ghee, Haripur Veg Oil, Khyber Veg., Suraj GheeIndus., Hydari Veg. Ghee, The Privatisation Commission (PC) was formed in January 1991 to manage the privatisation programme of the Government of Pakistan. During his tenure till May 1993, 65 units were privatised. But the PC’s performance in this period was marred by the corruption scandals of its Chairman Lt. General (R) Saeed Qadir and the sale of Muslim Commercial Bank (MCB) at a very cheap price to the cronies and alleged partners of the Prime Minister. As a matter of fact during this period may of the country’s prime assets were disposed a throw-away prices to “favourites”. The closure of these units has played havoc to the national economy and the first phase of privatization has contributed to the lower rate of industrial and economic growth. MAJOR BANKS (MCB & ABL) 63 INDUSTRIAL UNITS consisting of: - 7 Automobile and related units 8 Cement Plants 5 Chemical Plants 5 Engineering Units 1 Fertiliser Plant 16 Ghee Units 6 Rice Units 1 Textile Unit 14 Roti Plants The GDP growth which was above 6% in the 1980s declined to around 4% in the post privatization period.The reasons for closure is many. First the units were sold out without checking the creditworthiness of the party. Schon Group whose horrible reputation is household knowledge in Pakistan was given three units, National Fibre, Pak China and Quaidabad Woolen Mills. All these were closed after privatization. But again these sick units take new loan from banks or merger are now start function in 2005 with new owner but they were closed till 2005. These were not privatized transparently and Schon Group was able to access other offers before submitting their bids”. Moreover, they did not pay the first installment and the Privatization Commission did not take a strong line to forfeit the bogus investors. Lt Gen R Saeed Qadir and Sartaz Aziz owe an explanation to the nation for the unwarranted favour shown to Schon Group and also to Tawakkil Group, A Privatization Commission was set up under the chairmanship of General Saeed Qadir who sold off the State enterprises as hearily as he had poured billions of tax payer's money into building them as Minister for Production under Zia ul Haq Is it not a big joke with poor nation. Among the other major units which closed after privatization was Zeal Pak Cement. The buyer was not interested in running the factory but in stripping the assets. This is a frequent bane of privatization. Assets strippers buy, pay one installment, remove the machinery, sell the real state and then walk away. All the engineering units except Millat and Al-Ghazi Tractors (both are Running well) were closed after privatization, privatization was a big blow to the engineering sector in Pakistan, which was already very weak and had a small base. The Privatized units also formed cartels to exploit the consumers. A cartel was formed between D.G. Khan Cement and Maple Leaf Cement. Nawaz Sharif had earmarked 115 units for privatization and when his government was dismissed on April 18,1993, he had privatized two banks, 68 industrial units and 10% Shares of Sui Northern Gas Pipeline for a consideration of Rs 12,018 million. As opposition leader, Benazir hounded his privatization with charges of corruption and leading to concentration of wealth in few hands. So widespread were the charges of concentration of wealth that his government was forced to set up a committee headed by former Finance Secretary H U Beg to investigate into it. The report of the committee never saw the light of the day. In 2000 (NAB) the peak and there are about 30 disputed deals/litigation . Some of the prominent deals under dispute are. To (NAB, Dandot Works Awan National Cement. Case ported to NAB). Wha Cement Askari Cement Ltd). Idus Seal Pip (Sikandar Jatoi fron-man). Quaidabad Woolen Mils (Jehangir Anwar, case referred to to NAB) and the 2 most prominent deals under dispute are Kot Addu Power Company (KAPCO) which was he largest privatisation (with Change of Management) in he history of Pakistan and Bankers Equity Limited (the dispute was also referred to NAB and is now reached the Supreme Court of Pakistan).National Fibres Limited (Schon Group). Pakistan PVC(privatised to the old owners). Sindh Alkahlis (Employees Management Group). Pak China Fertilizer (Slikander Jatoi). National Motors (Bidojes Services ). Baluchistan Wheels Ltd. (Abdul Qadir Kapoorwala, case reported.But NOR finished all cases of corruption and looting of the nation money .NAB spend billion of rupees of exchequer to fight these references so at the end all things ruins and cases go in dust bin such a ashamed and NOR deal by shaeed Benazir butto and Gen R Mussy . the most corrupt man in the history of Pakistan become President of Pakistan after this NOR deal .All case of corruption is now in doldrums and now the FIA is interested to start new wind fall of looting and plundering the exchequer assets on the name of corruption in privatization of units from 1999 to 2008 .it is matter of time when they drag their legs too. Who will do accountability of these corrupt manifold practices of politician and dictators and establishment .
A committee was also set up in 1995 the Monoply Control Authority to look into the allegations that cement prices have escalated in the market because of the monoply created by the privatization of five cement factories to Mian Mansha and his associates. Out of 88 industrial units privatized to date, 19 were vegetable ghee units and 16 roti plants and rice-husking units while 20 bigger units accounted for more than half of the privatized assets and it were these units which were privatized to the big business.
The effects of privatization and liberalization on the performance of the banking sector in Pakistan, employing the CAMELS framework of financial indicators between the periods 1990-2008. The results obtained show little evidence of improvement in most of the indicators of financial health as a result of the privatization and liberalization policies pursued so far in the banking sector of the country The Effect of Privatization and Liberalization on Banking Sector Performance in Pakistan by Umer Khalid .Banking sectors in Pakistan sucks 2500 billion rupees profit after privatization of banking sectors in Pakistan.280 billion rupees Bail out programmed for banking sector by state bank of Pakistan from tax payer money financial crisis in OCT 2008 is it’s not really joke with poor nation of Pakistan .The profit windfall was enjoyed by cartels losses paid by tax payer of poor nation and internals and externals debts too. Privatized financial unit Bankers Equity Limited (BEL) has been closed after privatization as billions of depositor’s money was swindled by the party to whom it was privatized. The chairman of the Board of Directors of BEL before privatization was the Governor of the State Bank of Pakistan and after privatization a well-known thug. A leading financial institution was closed as a result of privatization and it had the strong negative impact on financial markets. As per reports looking at the privatisation of financial institutions alone, a record looting of Rs700 billion ($10.76 billion) took place. When 51 per cent of Habib Bank Limited (HBL) shares were sold to the Aga Khan Fund for Economic Development in December 2004 for only Rs22 billion, its total assets were worth more than Rs570 billion. (HBL had 1437 branches and another 40 in 26 countries; the company owned the branch buildings as well.) Another large bank, United Bank Limited (UBL), was sold for only Rs13 billion. The sale of these banks at throwaway prices was considered the largest financial scandal in the history of Pakistan. The sale of UBL to Abu Dhabi and Best Way Group is altogether inexplicable. First GOP poured Rs30 billion into UBL to cover its nonperformance loans and make it privatizable. This was not done in the case of earlier sale of MCB and ABL. After pouring such a huge amount of Pakistani tax payers money it has been sold to foreigners for Rs12.35 billion. In the first bidding Mian Mansha was shown to be the highest bidder but bidding was held again and Abu Dhabi and Best Way Group were on the top in the second round. GOP lost Rs17.65 billion in its privatization exercise. GOP has not explained as to why Rs30 billion of tax payers money was poured in UBL for privatization and what was the hurry in handing over this unit a week before the national elections. Amounted to Rs34.7 billion but if we deduct Rs30 billion poured in UBL Then the net receipts are only Rs4.7 billion. In the second phase the government
Has sold public assets which were highly profitable for a trivial net amount of
Rs4.7 billion. These three transactions (MCB, HBL, UBL) were done by Gen Mussy and his financial team done from 1999 to 2007.In these days banks start merging in Pakistan to make big cartels. Start new downsizing and keeping the workers on contract basis .it seem east India looting is started in Pakistan and end will be collapsing of whole state machinery and institution and civil war going to start like Lebanon or Somalia.
The 4rth tide of privatization in Pakistan 1993 to 1996,In her second term, Benazir privatized 25 industrial units, one financial institution, 1 DFI, 2 ENERGY COMPANIES ,16 INDUSTRIAL UNITS ,1 TELECOMMUNICATION COMPANY (PTCL) 5 OTHER UNITS , Kot Addu Power Plant and 12% shares of Pakistan Telecommunications Ltd. The big ones for 1996, Kot Addu and PTC really hold key for investor sentiment. The privatization commission has received a total of Rs.46.117 billion by selling the public sector Units. According to the details the Privatisation Commission (P.C.) collected Rs.30.5 billion on accounts of partially privatizing the Pakistan Tele communication Corporation (PTC) of which Rs.27.5 billion ($862 million) came through the sale of its foreign shares while Rs.3 million were received from local subscription
Kot Adu was major privatization during Benazir’s second term as Prime Minister. Kot Adu is WAPDA’s biggest generating unit with the following capacity combined cycle capacity till 1997 was 1684 MW. There was no need to privatize an already existing big power unit which was running efficiently. Its units were either gas turbine or combined cycles which can use either oil or gas. The government decided to sell 26% stake in it at a price of US$215 million. Subsequently 10% shares were to sold for US$76 million and the government realized only US$291 million from the sale of 36% share. The most interesting feature this privatization was that the government handed over the management of the unit to minority shareholders, which perhaps has never been done in the corporate history of the world. It was provided in the sale agreement that there would be nine directors, four independents, four nominees of the purchasers and one of WAPD
court’s intervention it was decided that there would be seven directors, four nominees of
WAPDA, two nominees of the purchasers and one CEO appointed jointly by WAPDA and purchasers. Initially it was decided that after privatization KAPCO will sell electricity to WAPDA at a tariff of 5.6 US cent per KWH. Subsequently this tariff was reduced to 4.9 US cent per KWH. WAPDA’s cost of generation at Kot Adu with gas feed stock was not more than 2.5 US cent per KWH. Hence, the government received US$291 million but WAPDA became a bankrupt organization after the sale of KAPCO and setting up of other independent power plants like HUBCO. The foreign party has been able to repatriate the total amount of US$291 million
during the last six years and WAPDA is being forced to pay twice the cost at which it was generating electricity at KAPCO before privatization. This is the most senseless privatization in Pakistan. In fact the whole policy of IPPs has terribly ruined WAPDA and its consumers all over the country are suffering because WAPDA has to pay such high rates to the IPPs including KAPCO and
HUBCO. The electricity tariff in Pakistan which is deemed to be the highest in Asia has also made the industry uncompetitive in world market.The main responsible is Mr Navid Qamar front man for King of corruption in Pakistan GEJA Gee of whole nation Mr Asif Ali Barbadi president of poor nation.Mr Navid Qamar was Ex and present privatization Minster in PPP led government in 1993 and now in 2008 too .
The fifth tide of privatization in Pakistan from 1997 to 1999. The second tenure o Nawaz Sharif proved to be a failure in terms of the privatisation process. It was expected that he would have learnt from his previous mistakes and would this time around give a real boost to the privatisation process. But even an honest PC Chairman like Khwaja Muhammad Asif could not restore the business confidence of investors which was totally shaken by the government policies. The government could only privatise 12 units raising a mere about Rs5.2 billion, and if we exclude the second phase sale of 10 per cent shares of Kot Addu (26 percent shares had already been sold in 1996 by the previous government): then the total money raised is only about Rs2.36 billion. It is interesting to note that the slow pace of privatisation was recognised by Nawaz Sharif during his tenure but his reaction was typically egoistical and in September 1998 he suspended the Cabinet Committee on Privatisation (CCoP) and appointed himself as the head of a Privatisation Board of Pakistan. Indus Steel Pipe (Hussien Industries) Dargai Vegetable Ghee Industries (Gul Cooking Oil Industries) roti plant Gulshan-e-Iqbal, Karachi (Ambreen Industries) Cecil's Hotel (Imperial Builders) Federal Lodges - 1- 4(Hussain Global Assoc) Punjab Veg. Ghee (Canal Associates) Habib Credit & Exchange (70 %)
(Sh. Nahyan bin Mubarik Al-Nahyan)
2nd part of senseless privatization in publishing soon sees the fertilizer and Gen MUSSY +Citi bank PM Corruption there are 138 different references for this work
Usman karim based in Lahore firstname.lastname@example.org