Some hard lessons
Obviously, it’s not just internal factors that led the government to roll back OGDCL’s privatisation – for the moment, at least – it’s also crucial external developments that have taken the wind out of the privatisation commission’s sails. That investors only ‘picked’ 52 per cent of government owned shares (offering potential revenue of $342m against expectations of $830m) is instructive and should push the government to reconstitute its revenue stream. Yet interestingly, the Commission continues to blame anti-government protests, along with the Peshawar High Court’s decision to halt the process, for the temporary rollback. It also put part of the blame on international oil prices.
Perhaps the Commission continues to overlook some of the more subtle aspects of privatisation. If the ’08 credit crunch proved one thing about cross-border transactions, it was that international investors are often more in sync with economic fundamentals than even host governments. Therefore, expecting investors bidding for a part of the pie not to understand Pakistan’s inner dynamics was naïve. No doubt the controversy over the government’s privatisation drive, not to mention its ad hoc handling of the public sector, has reached the international capital market where political currents are a key factor in green-lighting big-scale investments.
And now that it is at an impasse, the government must reorient some aspects of its economic strategy. PTI leader Asad Umar, brother of the privatisation commission chairman, is right that the government should have focused instead on cutting non-development expenditure and expanding the tax net to raise revenues. Privatisation is an extension of the bigger macro framework, but the government is falling back on it because of its failure in the more basic aspects of economic management. Also, it does not come out as politically astute when it chooses to keep the opposition in the dark about important policies, and resorts to brutal tactics when employees protest. If it is really committed to this route, then the more logical immediate path is building wide consensus. That, too, will require seriousness, which will only be reflected in policies that really help the real economy. There are some hard lessons for the government in the OGDCL drama.