Our long-term vision is a government that focuses on good governance and regulation, while fostering conditions to provide incentives for the private sector to invest, in providing goods and services efficiently. This would generate employment opportunities, which is necessitated by business development and would ultimately decrease unemployment and poverty alleviation. In short, we believe that the Government has no business being in business. The Privatisation Commission can help to put business into the right hands while freeing the Government to focus on such matters as ensuring law and order and making sure that the enabling framework is conducive to investment while being fair to consumers and the taxpayers.
Stable, macroeconomic and law & order situation are essential for creating a climate conducive for private investment. At the same time, competition, liberalization and deregulation are required for protecting the interests of consumers and for sending the right price signals to customers and investors. However, in infrastructure and utility services, competition may not be feasible. In such cases, a fair and comprehensive regulatory framework must exist to balance the needs of consumers and investors. In addition to defining standards for performance, safety, health and the environment; the regulatory framework must ensure that prices of goods and services reflect their costs of production and that investors are fairly rewarded for taking risks. The long-term interests of consumers are best protected by balancing the needs of investors and consumers.
The privatisation programme includes many State Owned Entities in the banking and finance, oil and gas, telecommunications, power, and industry and other sectors. However, the privatisation agenda is much broader. For example, while KESC was the first privatisation in the power sector following KAPCO, the Government is committed to privatizing all its power companies. In some areas, such as PIA, Pakistan Steel Mills and Pakistan Railways, the Government is attempting to turn around the companies before considering the privatisation option.
While there has been little official discussion of privatizing other sectors, many possibilities exist. For example, the Federal Government owns substantial amounts of real estate that could be privatized. The post office, which has been successfully privatised in several countries, could also be a candidate. Both ground and surface water resources could be privatised by assigning tradable property rights to water resources to existing users along with the transfer of irrigation infrastructure. This is working well in some Latin American countries and Australia.
Some Latin American countries have also successfully privatized roads, bridges, and water companies and are encouraging the private provision of education and health services by funding such activities rather than investing in them and operating them. The services themselves will be provided by private investors, NGOs, or community groups. International experience has shown that the public provision of social services typically does not help the poor, who are often excluded from services or whose quality is too poor to be useful. Options such as voucher schemes and lifeline tariffs can ensure that the poor can avail of the privatized services. Such initiatives may also prove fruitful in Pakistan.
In short, the potential privatisation agenda is large. Successful implementation of the existing agenda is key to ensuring further progress in privatisation in order to strengthen public finances and enhance the quantity and quality of Pakistan’s goods and services.