“Corruption through Privatization… A Contagious Disease” (From Musharraf’s Government to PPP’s Government)

There has been massive corruption during the eight years of Musharraf-Shoukat power period from 1999 until 2007. It is very clear that the privatization process has not been proved as a key to economic development as was claimed by the government, but instead a total disaster for the economy.

On 12 November 2007, the former Prime Minister Shoukat Aziz claimed that we have earned 417 billion Rupees ($6.41 billions) through privatization, a record amount according to him. While, only 57 billion Rupees ($.870 million) were fetched altogether from 1991 until 1999 by the civilian governments, he said the corner stone of our economic growth has been liberalization, deregulation and privatization.

A record 700 billion Rupees ($10.76 billions) of corruption has taken place during the privatization of financial institutions. When Habib Bank Limited (HBL) 51 percent shares were sold out to Agha Khan Fund For Economic Development in December 2004 for only 22 Billions Rupees, its total assets were more than 570 billion Rupees ($8.76 billions). While another large bank, United Bank Limited (UBL) was sold out only for 13 billion Rupees. HBL had 1437 branches and another 40 branches abroad in 26 countries with ownership of the buildings that the branches are functioning. The sale of these two banks on a very throw away prices is the largest financial scandal in Pakistan history. The 26 per cent shares privatization of Pakistan Tele Communication Limited (PTCL to Dubai based Aitsalat with management rights for only 157 Billions Rupees ($2.59 billion) is another gross violation of the rules set up even by Privatization Commission Pakistan. The Aitsalat bought PTCL after a 10 days strike against privatization by workers was crushed by the military regime in June 2005. The company then refused to take over and wanted more concessions. At the demand of the private company, it was agreed by the PC that another $370 million be reduced from the original price and the rest of the amount to be paid in installments.

Etisalat announced at the time of privatization in 2005, that none of the 70,000 workers would loose their jobs. However, in 2007, the company has kicked out 30,000 workers on the name of so-called voluntary scheme.

Karachi Electrical Supply Corporation (KESC) was sold out for only 16 billion Rupees. It failed to improve any electricity supply, on the contrary, there has been regular load shedding and most of the political parties have demanded to renationalize the KESC.

There has been a severe crises of agriculture due to the privatization of fertilizer public companies. Pak Saudi Fertilizer in Mir Pur Mathelo wan handed over to Fauji (military) Foundation in 2002 for just 8 billion Rupees. At the time, it annual profit was more than 4 billion Rupees. At Multan, Pak Arab Fertilizer was handed over to Arif Habib Group for only 13 billion Rupees. The price of the land of this factory was over 40 billion Rupees at the time of sale in 2006. On 15 July 2006, the largest Public sector factory Pak American Fertilizer was handed over for just 16 billion Rupees.
After the privatization of these factories, the price of a pack of fertilizer has gone up from Rupees 1300 to 3700 Rupees. This has put a massive extra burden on the peasants and all agricultural inputs have gone up.

 
 Unfortunately, the present Pakistan Peoples Party government has continued the policies of the former Musharaf Shoukat regime. The former government proudly declared that three main pillars of the Pakistan so called economic growth rest on liberalization, deregulation and privatization. The PPP government has no different options than these three.
The new finance minister of PPP has been the chairperson of Privatization Commission and minister privatization during the previous two periods of Benazir Bhutto government (1988-90, 1994-1996). He declared on 30 April 2008 that we have learned a lot from our previous experiences and we will do a “clean” privatization. He also tried to justified privatization as “pro worker and pro-people”.

The issue is not of clean or corrupt privatization. The process it self is anti worker and anti people as has the experience shown in Pakistan and internationally. The result has been that it has promoted unemployment, price hike, monopolization, low quality, inefficiency and huge profits for the rich.

Still, the website of Privatization Commission updated in March 2008 announces the planned privatization of Pakistan Railways, Pakistan International Airlines (PIA), State Life Insurance Corporation, Oil and Gas Development Corporation, Sui Northern and Sui Southern Gas Companies, Faisalabad Electric Supply Corporation, Peshawar Electric Supply Corporation, National Fertilizer Corporation, Port Qasim Authority, Civila Aviation Authority, Karachi Port Trust, Printing Corporation of Pakistan, All Utility Stores and Corporation, Rice Export Corporation, Cotton Export Corporation and Convention Center Islamabad.

We demand from PPP government that it stop the process of privatization. An independent commission should be established to investigate the corruption involved in the previous privatizations. Abolish the Privatization Commission and Privatization Ministry. The Protection of Economic Reform Ordinance should be withdrawn. The Ordinance gives constitutional protection to the process of privatization which is clearly doing nothing else than ruining our economy.

A Video Representation Of The Blog "Political Economy".

Political Impact on Economy

G

overnment to the People, by the People and for the People. I am not sure whether I had put this proverb right, but to be very honest, this is how I would want to interpret this. Pakistan is a country of Power politics and not Welfare Politics. As a nation, we were earned back in 1947 as not an Islamic State but as a Islamic “Welfare” State. Welfare means Wellbeing, Happiness, Benefit, Good and Safety. As you will go on reading my article, you can expect the usage of the above five synonyms in one context or the other but would find it a herculean task to figure the last time you, if reading my article within Pakistani borders, experienced such things.

Pakistan’s foundation is currently stumbling on these four pillars; Executive, Judiciary, Legislature and the new one, Media. The Executive, commonly referred to as the Political Leadership, of the country is the sole responsible to ensure the smooth running of the economy. The legislature formulates the law and agenda of how to go about it; the judiciary “should” hold you responsible while the media bring your faults to public.

Political moves decides how well the law and order situation would be in the country which is what decides how well the industries would fare in the economy. Just a few years ago, Pakistan’s law and order situation started to get further worsen, and was being taken as a Sole reason for the economic demise of the country, but now the energy crisis seems to have taken its toll as well. Would you imagine if your government tells you that the Vehicles would not be provided with the fuel they run on 3 days a week, how you would feel if your national government tells you that your textile industry would be deprived of gas and electricity for 3 days a week. For answers, you may refer this to an ordinary citizen from Karachi and an ambitious person from Faisalabad. To add insult to the injury, the government seems to have no plan in order to mitigate this energy crisis. In my sense of mind, it should not take ages for you to answer this question. Explore and seek fuel and energy from other natural sources.

Thar Coal project, owing to a nature coal treasure embedded in the national soil, can provide us with a continuous supply of Energy and Electricity of 50,000 Mega Watts for the next 500 years. But the current national government would want to rely on an alleged corrupt model of “Rental Power Plants”. Dams have become a major political manifesto points for the last one decade. It was the Musharraf regime that started the work on the Diamer / Bhasha and the Kalabagh Dams but eventually succumb of to the opposition of the minor interest groups. Imagine how these water reservoirs could have acted as a source to build in energy and would have prevented the interior villages from the gruesome floods that took their lives and livelihood both. But eventually, the result is the same, no progress and small hope.

Foreign Direct Investments have decreased by 86% in the last 10 years. There’s no electricity for the machines to run, why would someone want to risk their stake in a hell hole. At the same time, the government keeps on making tall claims of increasingly better relations with the other countries. What better relations would earn for us if these alliances don’t end up in a trade for Pakistan. It does not take you to be a rocket scientist to answer my questions.

A deteriorating economy brings in longitude and latitude of social problems for the country as well. Recession, a dive in the economic activity, decreases the average purchasing power of a lay man, causes a fall in the output and eventually lay-offs from their work. In a populated country like ours, one man on an average earns the bread for the next 6 or 8 people. So the loss of income of one man forces the others to suffer as well. Now this is what forces people to take extreme measures. By extreme measures I mean, suicidal successful or partially successful attempts or taking the law and order in to their hands to earn their living. So in effect, an economy whether successful or otherwise, would decide how the wheel of life would eventually run and who would eventually control the smooth running of the economy, no prizes for guessing, the ruling government of the country.

The value of money has deteriorated fast in Pakistan. Rising imports and surplus printing of money has not helped Pakistani Rupee much, giving further strength to Foreign Currency and the value of Pakistani Rupee has further gone down the drains. So much so that we had to print a 5,000 Rupees note. This new development says a lot on our economic platter.

The deficit now stands at whopping PKR 3,000 Billion Rupees which is ever increasing because of rising imports and falling exports. Tax revenue is being used for other non-development expenditures and so to call “private benefits”. I would leave this judgment on your good self of what the new government should and should not be doing to help this make look a bit better

Written By

Fizza Kamal BSS-7