Asian Social Science; Vol. 8, No.

12; 2012
ISSN 1911-2017 E-ISSN 1911-2025
Published by Canadian Center of Science and Education

Privatisation and Reform Programme of Public Sector Enterprises in

Pakistan 1960–2004
Anwar Ali Shah G. Syed1, Lawal Muhammad Anka2, Syed Asad Raza Abidi3 & F. M. Shaikh4
1
Daddu Campus, University of Sindh, Jamshoro, Pakistan
2
Zamfara Agricultural and Rural Development Authority, Samaru Gusau, Nigeria
3
SALU, Khairpur Mirs, Pakistan
4
Z A Bhutto Agricultural College, Dokri, Pakistan
Correspondence: F. M. Shaikh, Z A Bhutto Agricultural College, Dokri, Sindh, Pakistan. E-mail:
[email protected]; [email protected]

Received: March 14, 2012 Accepted: May 27, 2012 Online Published: September 20, 2012
doi:10.5539/ass.v8n12p171 URL: http://dx.doi.org/10.5539/ass.v8n12p171

Abstract
The aim of this paper is to analyse the privatisation process of public sector enterprises in Pakistan during the
period from 1960 to 2004.The paper further examines the performance improvement of public sector enterprises
and finally develops a reform programme for future sustainability of these PSEs.The major conclusion drawn
from this paper were: - During the period of 1952 – 1960, PIDC established more than 100 industrial enterprises,
majority of these enterprises were in East Pakistan set up as joint ventures in Jute Industry.In the period of 1972
– 1977, the government invested in finance, insurance, transportation, communication and energy.As a result of
restructuring of auto sector in the 1980s, sales in PASCO during the nine years period increased from
RS2395million, in 1980 – 81 to RS10830million, in 1988 – 89.From 1990 – 1998, 188 public enterprises were
identified out of them, 67 enterprises were privatised.Finally, in 2004, Pakistan had completed/approved 139
transactions at gross proceeds of RS134.4billion, of this amount RS33.1billion was received in March 2004.An
agenda for performance improvement should include autonomy, organisational structure and efficiency of
government enterprise.Similarly, the reform programme for sustainability of public sector enterprises should also
include general policy environment, government enterprise relationship and management of industrial
enterprises.
Keywords: privatisation, reform programme, public sector enterprises
1. Introduction
Like most reform Asian countries Pakistan also recognised the importance of privatisation in the restructuring of
its economy.The country embarked on a privatisation programme which is part of a broader economic reform
and liberalisation programme designed to restore macroeconomic stability, achieve faster sustainable growth,
raise living standards and reduce poverty (Chaudhry 2010).
The reform programme was also aim at promoting greater private sector participation in economic activity and
included maintenance of sound macro-economic policies, deregulation with emphasis on power,
telecommunications and the petroleum sector.In the 1950s and 1960s, the dominant view in development
economics was that the market based system failed to work efficiently in poor countries.
There was a need for active government intervention and participation to offset market failures.As a result, the
[public sector expanded tremendously during the period 1950 – 1980.However, interventionist policies
restrictive regulations and state involvement in economic activities failed to achieve low unemployment, less
inflation and high economic growth (Anka, 1992).
In the recent years, there has been a growing belief that developing countries have over extended the role of
public sector in the economy.This has had a negative impact on the overall macro-economic stability of
developing countries which has consistently resulted in large sector deficit, high level of inflation and balance of
payment problems (Zaidi, 2005).
In order to tackle these problems, an increasingly number of developing countries has implemented major

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structural adjustment programmes which have substantial elements of privatisation.Imposition of privatisation on

the development agenda is largely due to external pressures from international aid donors and financial
institutions such as World Bank and IMF (Asad, 1995).
It is important to note that privatisation has achieved relatively limited success in most developing
countries.Fears of outside dominance, underdeveloped capital markets inflexibility in public finance, workforce
opposition and a private sector highly dependent on state for future subsidies and contracts are common
constraints (Naqvi and Kemal, 1991).
Privatisation programmes require a great amount of careful advance planning from both political and economic
stand points.It is essential that privatisation ought to be limited specifically in the use of competition as an
instrument for achieving economic efficiency.The most difficult hurdle to successful privatisation policy is one
of determining the correct valuation of assets.
Every attempt has to be made to avoid the public perception that assets were under valued and sold too
cheaply.After receiving the assets valuation, the government faces difficult problem of balancing the necessity to
maximise proceeds, particularly in view of the sensitivities in this regard with the economic, political and social
objectives that are driving the privatisation process (Mendim, 1991).
1.1 Problem Statement
The major reasons why the privatisation process is proceeding in Pakistan is that there is a strong believe that
public sector enterprises are inefficient, costly to run, poor performances and a major drain on the state
exchequer.The argument goes that the state should no longer subsidise loss making enterprises and they should
be either sold to private sector to run and manage or closed down altogether.Today, the conventional wisdom is
that government has good intentions but more need to be done.So in many ways, the existence of public sector
industries is itself in question and with the increased pace of privatisation taking place in most countries
including Pakistan.It is possible in some years to come many PSEs will be privatised.
1.2 Objectives
The objectives of this paper were:
- To present a critical appraisal of the privatisation process in Pakistan.
- Analyse privatisation process from 1960 to 1980, 1990 to 1988 and 2000 – 2004.
- Examine performance improvement of public sector enterprises.
- Develop a reform programme for public sector enterprises.
- Highlight constraints in the privatisation process.
2. Critical Appraisal of Privatisation Process
S. N. H. Naqvi and A. R. Kemal critically examine the concept of privatisation and show how the process
resulted in serious negative consequences.The two scholars share the view that public and private investments
are essentially complimentary to nature and that while private investment holds the greatest promise in areas
where productive efficiency matters, its success depends on well thought out programme of public investment
which first provides an efficient infrastructure.
It is essential that privatisation should take place where it has the most promise of adding to productive
efficiency and growth considerations.And in this context, there is enough empirical evidence in Pakistan to show
that changing the locus of ownership from public to private is neither a necessary nor a sufficient condition for
achieving any of the avowed goals of privatisation even on the theoretical grounds.Other objectives for going
private e.g. mobilising financial resources for the government had better be achieved by other more effective
policy instruments.
Indeed the real word experience suggest that across the board privatisation taking place most on ideological
grounds may prove not only self defeating but positively counter productive.Thus profitable companies can as
well be given over to their not too worthy exacerbating the degree of concentration in the economy and the
apparently defaulting enterprises may in fact be given away to friends of the regime thus increasing the element
of crony capitalism.
Aftab Ahmed Khan identifies some of the reasons why there has been so much criticism of the privatisation
programme.An imperative for the success of privatisation is the transparency of the process to avoid people’s
suspicion and ensures their support.All aspect of the privatisation exercise must be out in the open and there
should be no suspicion of political patronage, corruption, favouritism or cronyism in implementing

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it.Unfortunately, this important dimension of privatisation has not been given due attention in some privatisation
transaction and this has resulted in casting doubts on the integrity of those responsible for deciding the choice of
parties in the cases.Past trends suggest however that little changes to be expected in the manner of the
privatisation process in future.
2.1 Privatisation Process 1960s to 1980s
Prior to 1972, the main public sector industries were managed by Pakistan Industrial development Corporation
(PIDC) which was created in 1952 with the aim of accelerating the rate of industrial development in the
country.PIDC was to transfer its projects to private entrepreneurs once they become profitable in order to
promote and strengthen the private sector.It was also expected to promote a sense of regional balance between all
the Provinces in Pakistan (Zaidi, 2005).
In the period 1972 – 77, the role of the public sector was considerably expanded and by 1977 the government
was heavily involved in finance and insurance, manufacturing, transportation and communication and energy.It
had also entered the construction, trade and commerce, mining and agricultural sectors.The Zia-ul-Haq regime
did not increase the role of the government by establishing new public enterprises and much of the public sector
investment during the early years of the Zia period went into ongoing projects (Mehdi, 1991).
Although very little was privatised under the Zia government, the role of the public sector began to diminish as
the private sector was chosen as the leading vehicle to bring about economic and industrial development.After
1991, the contribution of public sector enterprises was further minimised with the launch of the privatisation
programme, see Table 1.
Table 1. Share of the public sector in various activities – 1960-1980
Various Activities 1960-61 1965-66 1970-71 1974-75 1984-85 1987-88
Agriculture - - - - - -
Forestry - - - - - -
Fishing 0.0 0.0 0.0 0.2 - -
Mining 3.7 19.1 24.90 10.1 93.0 93.0
Manufacturing 2.1 2.4 2.4 8.1 11.1 10.1
Electricity and Power 85.0 98.2 65.0 77.5 100.0 100.0
Construction 0.0 0.0 0.0 0.0 0.5 0.4
Trade 0.0 0.1 0.4 7.9 1.3 30.2
Transport and Communication 62.3 44.1 34.2 33.9 30.1 30.3
Finance Na Na 14.6 67.5 95.2 95.2
Others 0.0 0.0 0.0 0.0 0.1 1.6
Share in GDP 4.9 4.8 4.2 7.7 10.6 11.6
Share in Non Agric GDP 9.3 7.9 6.6 11.5 14.3 13.7
Source: Naqv SNH and Kemal A.R. (1991), the Privatisation of P7ublic Industrial Enterprises in Pakistan,
Pakistan Develo0ment Review, Vol. 31, No.2, 1991, pp 111.
Given he abhorrence of the regimes after Zulfiqar Ali Bhutto towards the public sector enterprises and the desire
to get rid of these units by different governments since 1991, one might have the impression that the State was
burdened by this loss, making inefficient units and wanted to rid itself of them as soon as possible and at any
price.It is important to note that the evaluations under taken of the public sector at different times since 1977
paint a very different picture.

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Table 2. Output employment and productivity indices of public sector industries 1972–1982
Public 1972-7 1973-7 1974-7 1975-7 1976-7 1977-7 1978-7 1979-8 1980-8 1981-8
Sector 3 4 5 6 7 8 9 0 1 2
Industries
Production
100 131 160 167 162 117 126 166 169 192
Value
Employme
100 119 136 14 158 100 102 109 121 126
nt
Labour
Productivit 100 111 118 116 102 117 124 152 140 152
y
Productivit
100 120 123 120 Na - - - - -
y Indices
Source: Annual Report of Public Sector Industries, Federal Bureau of Statistics, Government of Pakistan,
Islamabad, 1981 – 82.
Viqar A. and R. Amjad management of Pakistan’s Economy 1947 – 82, Oxford University Press, Karachi,1984.
Table 2 shows the important indices of the public sector industries compared to the overall manufacturing sector
in the period 1972 – 82.While the public sector industries did fairly well under the Bhutto government, they
performed even better under the more open and liberal economic regime of Zia.
There was a significant increase in profits and productivity by State owned enterprises in the early Zia period
possibly due to a pro-investment and growth-friendly overall economic political environment and encouraging
economic growth.A large scale privatisation effort was launched by the Nawaz Sharif government in November
1990.Disinvestment and Deregulation Committee was established to identify the enterprises to be privatised and
to make recommendation on how this process should take place.
The above committee established the principle that government should completely retire from the production of
industrial goods and identified 109 industrial units that should be privatised at the earliest and forthe nationalised
Commercial banks which had 88 percent of total deposits with them, see Table 3.
Table 3. Privatisation of state owned enterprises
Enterprises Number of Units of which Value of Unit Sold (RSM)
Total Sale Sold Mgt. Transfer Total Received
Commercial Banks 5 4 2 2 5,122 2,135
Industrial Units 124 105 67 47 8,219 3,896
Automobiles 15 10 8 5 1,043 583
Cement 15 15 11 8 4,658 2,253
Chemical and Ceramics 14 12 5 5 1,030 431
Engineering 12 9 4 4 141 58
Fertiliser 7 5 2 1 457 183
Ghee and Vegetable 23 23 15 9 626 250
Roti Plants 17 17 13 11 99 60
Rice Mills 8 8 7 4 165 78
Miscellaneous 13 6 2 0 0 0
Total 129 109 68 49 13,341 6,031
Source: World Bank Pakistan Country Economic Memorandum, FY93 Progress under the Adjustment
Programme Report, No. 115900 – PAK Washington, 1993, P.51.
The committee was dissolved and replaced by a Privatisation Commission in January 1991, which was to
supervise the privatisation process.In the early phase of privatisation, the programme was unsuccessful with few
bidders for the targeted firms.Since privatisation was a cornerstone of the government’s economic policy, the

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government revised the strategy and accelerated the process.

2.2 Restructuring of Automobile Sector in the 1980s
During the 1980s an attempt of privatisation and restructuring was carried out by Pakistan Automobile
Corporation (PACO), the Automobile Corporation basically had three categories of activities:
(a) Vehicle assembly cum manufacturing
(b) Tractors assembly cum manufacturing and
(c) Manufacturing of various components of automobile
PACO made a number of experiments through restructuring of some units pruning of surplus labour and
reorganising some enterprises and transfer of management of some into private hands.The major measures were
as follows:
(a) One truck manufacturing unit was transferred to the private management while government maintained
the majority share holding.
(b) Transfer of management of one tractor manufacturing Cum-Assembly Unit.The majority ownership
remained in the hands of public sector.
(c) Restructuring of two Units and developing Joint ventures for manufacturing of Suzuki motor cars and
motorcycles.
(d) Transferring the management of domestic appliances transfer of manufacturer of air-conditioning and
refrigerators to private sector management while keeping the majority share holdings.
(e) Transferring of shares of franchise of a truck manufacture and passenger car and four wheelers to two
different private parties.
(f) Retrenchment of surplus labour from one truck manufacturing unit and one fabrication unit.
(g) Developing of two main facilities for manufacturing of components for the vehicle industry namely
Baluchistan wheels and Bolan castings.
As a result of the above mentioned experience, the sales in PACO during the past 9years have increased from
RS2395million in 1980-81 to RS10830million in 1988-89; a growth of 2.3% profit has increased from
RS73million in 1980-81 to RS367million in 1988-89, a growth rate of 2.2%.The return on assets during this
period has increased from 3.3% to 5.9%.
3. Privatisation Process 1990 to 1998
During the period pg 1990 to 1998, 188 public enterprises were identified for privatisation out of these 67
enterprises have been privatised and transferred to the private sector.The buyers include 9 employee groups, 5
foreign firms and 8 ex-owners, see Table 4 for details.
Table 4. Privatisation process 1990 to 1998
Various Activities 1991 – 94 1995 – 96 1996 - 97 1997 – 98 Total
Automobile 7 - - - 7
Cement 9 2 - - 11
Chemicals 7 5 - - 12
Fertiliser 1 - - - 1
Engineering 5 2 - - 7
Ghee 16 - - - 16
Rice 7 1 - - 8
Roti Plants 12 - - 1 13
Banks 2 - 2 1 5
Power - 1 - - 1
Hotels and Resorts - - - 8 8
Miscellaneous 4 2 - - 6
Total 70 13 2 10 95
Source: Pakistan Economic Survey, Government of Pakistan, Islamabad 1997 – 1998.

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3.1 Implementation of Privatisation Programme in the Year 2002 to 2004

Salient features of privatisation of state owned enterprises aimed at amassing US$3billion, the government is
committed to the privatisation of sizeable assets in the telecommunications, banking, oil and gas, power and
industrial sector. Details of State own enterprises already privatised are presented in Table 5.
Table 5. Transaction in respect of privatisation programme completed in 2002
Company Type of Sale Target Bidding Date
Oil and Gas Envisage -
Oil and Gas Development Corporation 51% Shares 4th Quarter 2002
Pakistan State Oil 51% Shares 3rd Quarter 2002
Pakistan Petroleum 51% Shares 1st Quarter 2003
Sai Northern Gas Pipeline 51% Shares 2003
Sai Southern Gas Corporation 51% Shares 2003
Power and Telecommunication
Pakistan Telecommunication 25% Shares 4th Quarter 2002
Karachi elect Supply 74% Shares 3rd Quarter 2002
Faisalabad Elect Supply 26 – 51% Sales 4th Quarter 2002
GencoJamshoro 26 – 51% Sales
Banking & Capital Market
United Bank Limited 51% Strategic Sale June 2002
Allied Bank Limited 49% Block Sale 3rd Quarter 2002
Habib Bank Limited 5 – 10% IPO 4th quarter 2002
Habib Bank Limited 51% Strategic Sale 4th Quarter 2002
Investment Corporation of Pakistan Right to manage closeended funds July 2002
Source: Pakistan Economic Survey, Government of Pakistan, Islamabad 2001 – 2002. Table 3.13, P. 42.
3.2 Achievements Recorded in 2004
At the end of 2004, Pakistan had completed or approved 139 transactions at gross proceeds of RS134.4billion of
this amount of RS33.1billion was received during July – March 2003 – 2004 from the sale of government’s
shareholding in OGDCL, NBP, POL, ARI, D.G,. Khan Cement, SSGC, Thatta Cement, 51% GOP Stake in HBL,
Associated Cement, Rohri and 10% of the gross proceeds received so far were transferred to the Federal
Government, 18% were returned to companies on whose behalf shares were sold, 6% were used for restructuring
expenses associated largely with golden handshakes and rehabilitation and 5% were used for PC privatisation on
related expenditures.Progress on privatisation is documented in Table 6.
Table 6. Number of privatised transaction 2003 - 2004
Sector 1991 – 2002 2002 – 2003 2003 – 2004 To Date
No. Amount No. Amount No. Amount No. Amount
Banking 4 5,644 2 12,970 1 22,409 7 41,023
Capital Market 3 1,300 8 8,421 3 8,759 14 19,480
Energy 12 20,898 - 5 - - 12 20,903
Telecommunication 2 30,558 - - - - 2 30,558
Automobile 7 1,102 - - - - 7 1,102
Cement 11 7,790 - - 2 969 13 8,759
Chemical/Fertiliser 16 9,383 1 815 1 6 16 10,204
Engineering 7 187 - - - - 7 187
Gee Mills 21 768 - - - - 21 768
Rice/Roti Plants 23 326 - - - - 23 326
Textile 2 87 - - - - 2 87
Newspapers 5 270 - - - - 5 270
Tourism 3 594 - - - - 3 594
Others 5 154 - - - - 5 154
Total 121 79,061 11 22,211 7 33,143 139 134,415
Source: Annual Report of Privatisation Commission, Government of Pakistan, Islamabad, 2003 – 20.
A new feature of the privatisation is offering shares to the general public through stock markets which has been

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enthusiastically received by the general public.For example, in the case of OGDCL 97,000 applicants purchased
shares whose subsequent value increased over RS8billion.The response SSGC offering has been even greater
with over a quarter million small applicants receiving share offering through a transparent balloting.
4. Performance Improvement of Public Sector Enterprises
4.1 Performance Criteria
The reason for a valid performance evaluation system for public enterprises in Pakistan is necessary within this
system a criterion has to be formulated, this may be private targets or public profit, capacity utilisation or by unit
of labour productivity.It may be the number of working hours per every employee, this will also depend on
individual industry.There are numerous other constraints involved in performance evaluation, and setting of the
point in the scale requires a great deal of care and attention and the source of information that will assist in
setting these criterion values include:
- Comparisons with similar firms
- Industry trends.
- Comparisons with results of previous years
- Professional judgement by controlling organs (Ministry)
- Professional judgement at enterprise level
4.2 Determinants of Performance
(a) Units which have least political and economic problems such as least number of labours affected maximum
potential of efficiency enhancement will need to be identified.In other words, the priority has to be based on a
strategic privatisation (Ahmed and Laporte, 1989).
(b) Therefore certain units which are model for the specific industry because of their quality which is being
provided by public sector enterprises (may be at higher cost).These units may need to be kept within public
sector at least in the short term.
(c) An effective improvement programme for these public enterprises through an improved organisational
arrangement for their control has to be ensured otherwise the transfer of inefficiency of some of these public
sector enterprises will deter the efficiency enhancement attempt of the privatised units (Anka, 1992).
(d) Privatisation is a comprehensive and a complete exercise.It will require a number of issues to be dealt with,
some of which are: - (i) Evaluation of assets (ii) Selection of the method of privatisation (i.e. floating of shares to
public direct negotiations with the selected bidders and or leasing the assets etc), this will need a training of
specialists in selected fields.
(e) Development of a programme of rehabilitation of surplus labour is a critical issue in the privatisation
exercise.An effective programme for manpower development by way of re-training, development of pool for self
employment is critical for an effective privatisation programme (Sharley, 1989).
4.3 Agenda for Performance Improvement
Public Sector Enterprises (PSE) in Pakistan have emerged as important organisational devices for the
management of the economy.These enterprises play a very good role in finance and insurance, electricity and gas,
transport and communications sector and they enjoy an important position in manufacturing mining, and
quarrying sections (Jamali and Anka, 2011).
In order to attain the desired objectives of improving the operational efficiency of these enterprises and thereby
their resource generation an agenda for reform, has to be worked out.In reforming (PSE), we have to look at
three levels (i) Government policy environment (ii) Government enterprise relationship and (iii) Enterprise
levels.Any agenda for reforming PSE has to look into and deal with all the three levels.The first and third levels
i.e. the Policy environment and enterprise level shall require reforms which on the one hand create conducive
and competitive environment for an individual PSE to improve performance by reviewing policies such as
pricing, fiscal and resource allocation policies etc (Abbas and Malik, 2010).
On one hand, a restructuring exercise has to be carried out to develop these enterprises into a viable commercial
entity.An agenda will also focus on efficient management enterprises relationship.This shall require development
of institutions and management systems which would improve the quality of controls by the government and
increase the autonomy of PSE Managers, so that they are motivated to attain the desired results (Looney and
Frederickson, 2007).

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In working out the details of the government enterprises relationship, three elements have to be reviewed and
improvements have to be made.
(a) Autonomy – Arrangements have to be made to provide free hand to the managers improving
performance, and demonstrating managerial skills to show the results.
(b) Organisation Structure – The key element in this is to establish efficient and effective focal point or
points at government level for control of PSEs on professional lines.
(c) Efficiency of Government Enterprises Relationship – shall be dependent on establishment of
management system that assist controllers to improve the quality control of PSEs.
5. Reforms in Public Sector Enterprises (PSE)
In preparing an agenda for improving the performance of PSE, it has to be seen in the conceptualframe work of
PSE management. In this regard, a structural approach needs to be developed by looking at the levels.
(a) Level I – General Policy Environment – This refers to a number of factors such as government policies
towards pricing, labours credit and investment.
(b) Level II – Government Enterprises Relationships – This refers to the specific relations of PE
sub-system with the main government administrative system.It requires a comprehensive review of all
aspects of PSE management control system as information system apparatus for PSEs etc.
(c) Level III – Management of Industrial Enterprises – This refers to internal enterprises management
such as internal control system e.g. budgeting and accounting practices, product lines, marketing etc. It also
addresses the issue of implementation of restructuring and privatisation policy.
The first and third levels address to the general micro-economic environment of enterprises both public and
private. The second level i.e. government enterprise relationship however are specific to PSE management and
the peculiar nature of private ownership which requires specific treatment system, for creating a healthy
relationship between the system and sub system.

Figure1. Three levels of reform of public sector enterprisesmanagement system

Source: Adopted from Mehdi I. (1991) Privatisation and Performance Improvement Efforts of Public Sector
Enterprises in Pakistan.A Paper presented at PSDE Conference organised by PIDE Islamabad 8 – 10 January,
1991.

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5.1 Constraints in Privatisation

- Weakness of capital markets is a major obstacle to successful privatisation of public sector enterprises
because there are few financial intermediaries to push savings into stock markets.
- In view of weak capital market and financial regulation framework which makes public more reluctant
to invest in shares, the World Bank recommend Pakistan and other developing countries to improve their
auditing and financial reporting requirements in order to generate public confidence in the privatisation
policy.
- In Pakistan, most PSEs are highly labour intensive, new owners after privatisation will seek to
rationalise activities which results in large scale redundancies.The government placed a minimum period
of twelve months during which workers could not be laid off.
- The absence of active capital markets makes the process of business valuation very difficult (Khan,
2011).
- In the absence of an effective performance, evaluation of PSEs, the quality of accountability and
autonomy of both organisations as well as their Managers suffer.This in turn leads to the problems of
motivation of PSEs Managers and workers (Hassan, 1992).
- Another problem of the PSEs management is the absence of long term corporate planning managers
used to show performance in the static situation e.g. profit for years etc.Planning for longer term remains a
weak area resulting into sudden shortages of the output or demand outstripping supply (Khan, 2011).
- The inter-linkages of the PSEs (dependence of one another) frequent transfer of inefficiency of one
another creating further problems in accessing their performance
6. Summary, Conclusions and Recommendations
6.1 Summary
The major purpose of this paper was to analyse the privatisation process of public sector enterprises in Pakistan
during the period from 1960s to 1980s, 1990s to 1998 and 2002 to 2004.The paper further examines performance
improvement of public sector enterprises and finally develops a reform programme for future sustainability of
these PSEs.
6.2 Conclusions
The major conclusions drawn from this paper were:
- In the period 1972 – 77, the role of the public sector enterprises was heavily involved in finance, insurance,
manufacturing, transportation, communication and energy.
- There was a significant increase in profits and production by State owned enterprises in the 1970s possibly
due to a pro-investment and growth friendly and encouraging economic growth and development.
- As a result of restructuring of automobile sector in the 1980s sales in PACO during the nine year period
increased from RS2395million, in 1980 – 1981 to RS10830million and in 1988 – 1989 a growth of 2.3%
profit increased from RS73million in 1980 – 1981 to RS367million in 1988 – 1989.
- During the period of 1990 to 1998, 118 public enterprises were identified for privatisation out of these, 67
enterprises have been privatised and transferred to private sector.
- During the period of 2002 to 2004, Pakistan had completed/approved 139 transactions at gross proceeds of
RS134.4billion, of this amount RS33.1billion was received during July – Match 2003 – 2004 from the sale
of government share holding in OGDCL, NBP, OPOL, ARI, DG Khan Cement, SSGC and Thatta cement.
- In the year 2004, a new feature of privatisation is offering shares to the general public through stock
markets, 97,000 applicants purchased shares whose subsequent value increased to over RS8billion.
- Public Sector Enterprises (PSEs) in Pakistan have emerged as important organisational devices for
management of the economy.An agenda for performance improvement should include: - autonomy,
organisational structure and efficiency of government enterprise.
- The reform programme for sustainability of public sector enterprises should also include: - general policy
environment, government enterprise relationship and management of industrial enterprises.
6.3 Recommendations
On the basis of the above conclusions, the following recommendations are made:

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- The regulatory role of the State in privatised enterprises must be flexible enough to encourage efficiency,
competence and financial discipline.
- It is now time for us to re-evaluate our economic system and develop a vision and structure of a new
economic order in line with the aspirations of our masses.
- Every privatisation transaction should encourage wider share ownership whenever possible.Similarly, also
competition should be introduced as part of the privatisation process where ever possible.
- In view of the increased government intervention, both in the public and private sector are interlinked
either with a certain government policy or a private enterprise.Unless an effective deregulation policy is
introduced, the problem of limited efficiency may continue.
- It is recommended that privatisation of PSEs has to bedone in phases in view of the large number of public
sector enterprises and limited absorption capacity of the market.Identification of priority units and their
methods of privatisation shall be critical for the subsequent programme.
- A more comprehensive legal framework which address the following three elements: - organisation,
implementation and follow-up need to be developed.
- It is important to develop an institution for ensuring consumer interest by way of keeping, low prices and
maintaining quality.This is in respect of monopolistic enterprises.Development of a regulatory commission
on the pattern of North America and Canada may be considered.
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