The private sector remains the driving force in any free market economy. Economies that are free from government intervention in the private sector decision-making are considered favorable places for making further investments by domestic and international investors. Pakistan’s privatization program helped reduce burden on its exchequer and resulted in better working conditions for employees of privatized units, reduction in corruption, and improved performance of these organizations.
In the past three years, the government not only stopped such reform process, but also reinstated thousands of retrenched workers in public sector organizations, increasing the debt burden. Most recently, the government intervened into a Karachi Electric Supply Company’s (KESC) decision and forced it to reinstate 4,500 employees sacked by the organization. KESC was privatized in 2005, with the government retaining 26 percent of shares. Since 2009, Dubai-based Abraaj Capital (one of the world’s 50 largest private equity groups) has had the management control of the organization.
A report published in The News explains that “with over 17,000 employees and runaway cost of fuel oil, KESC is struggling to run its operations smoothly.” Its further says that, “In three months to September 2010, KESC reported a loss of Rs1.782 billion, lower than Rs5.615 billion incurred in the same period last year. Accumulated losses of KESC have crossed Rs81 billion.”
Following heavy protests from the sacked workers, government got involved at the highest level. Meetings were held at the office of Governor of Sind, attended by Federal Minister for Power, Provincial Chief Minister and leaders of political parties to force KESC to withdraw its decision.
KESC Managing Director in a TV interview maintained that the foreign investors at Abraaj were extremely furious over the government’s intervention into a legitimate commercial decision. The government’s move and political pressures caused severe damage to the concept of free market economy in Pakistan. In a competitive and open economy, government should focus on providing skill development facilities to unemployed so that they become useful part of national workforce.
Published Date: January 25, 2011