Monday, October 29, 2012

(economic) Restructuring

May 21, 2010 

Keep in perspective the Dates… 

The government wants the IMF to provide $3 billion and another $1.5 billion to $2 billion for adjustment of the loan installments and maintenance of the balance of payments during the current financial year, said official in the Ministry of Finance.
(Mazhar Tufail, Pakistan accepts 11 IMF conditions, November 02, 2008)

ISLAMABAD -(Dow Jones)- Pakistan [Friday April 23, 2010] gave the go-ahead for the privatization of Jamshoro Power Company and two other state-run firms as the country looks to reduce its heavy debt burden. 

In under developed countries, in era’s of dictators especially, not only the state violence intensified but economic reforms were implemented, which resulted in debt escaltion, currency devaluation, poverty elevation, sale of assets, emergence of Western financial institutions and political instability. Eventually economy of those countries weakened. (Atif Abbas, Economic Restructuring in Pakistan, March 12, 2009). 

Musharraf (1999-2007) won Washington’s support by implementing privatization and deregulation programs that have only exacerbated the plight of Pakistan’s rural and urban poor. …the Musharraf regime is implementing a $6 billion privatization scheme that includes the sell-off of banks and electrical power utilities (Joseph Kay,, April 30, 2002).

The government privatized financial institutions (HBL, UBL, MCB), Pakistan Telecommunication Company Limited, Pakistan Steel Mills and Karachi Electrical Supply Corporation. Whereas privatization of fertilizer public companies (Pak Saudi Fertilizer, Pak Arab Fertilizer) led to severe crisis of agriculture. Both the puppets left politically fractured and economically crippled Pakistan without facing any trial. (Atif Abbas, Economic Restructuring in Pakistan, March 12, 2009). 

"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."

… When privatization started in 1991, the foreign debt was 23.323 billion Dollars. Now, in 2008, it has gone up to 45 billion Dollars." (Farooq Tariq, spokesperson Labour Party Pakistan).

“If the chief justice [Iftikhar Muhammad Chaudhry] of Supreme Court of Pakistan had not stopped the privatization of Pakistan Steel Mills Karachi in 2006, the former [Musharaf] regime would have sold most of the public institutions on throwaway prices. This would have been like selling Pakistan.” (Farooq Tariq, Labor Party Pakistan, June 11, 2008).

During eight years of Musharaf-Shaukat privatization push, corruption of 1550 Billion Rupees has taken place, according to conservative estimate of Anti-Privatization Alliance (APA) Pakistan.

Eric Ellis wrote in his report (Privatizing Pakistan, October 2005), “The targets include Javedan Cement (Karachi), Mustehkam Cement (Haripur), Pakistan International Airlines, Pakistan Steel Mills and the country’s upstream and downstream oil companies, Pakistan Petroleum and Pakistan State Oil Co.”. 

Farooq Tariq (Labor Party Pakistan, June 11, 2008) mentioned, 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 (OGDC), Sui Northern and Sui Southern Gas Companies, Faisalabad Electric Supply Corporation, Peshawar Electric Supply Corporation, National Fertilizer Corporation, Port Qasim Authority, Civil Aviation Authority, Karachi Port Trust, Printing Corporation of Pakistan, All Utility Stores and Corporation, Rice Export Corporation, Cotton Export Corporation and Convention Center Islamabad.

“The privatization of public-sector entities will remain the cornerstone of the government’s economic agenda.” (Privatisation Commission, November 04, 2008). 

“Companies earmarked for partial or total privatization include: the National Power Construction Company, Jamshoro Power Company, Faisalabad Electric Supply Company, Heavy Electrical Complex, and the Qadirpur gas field. The government says it hopes to raise between $2 billion and $3 billion through this latest privatization wave.” (Keith Jones,, November 13, 2008).

The 23-month standby arrangement of about $7.61 billion was approved on Nov 24, 2008. On Aug 7 last year, the arrangement was augmented to about $10.66 billion and extended to the end of 2010. (Anwar Iqbal , IMF releases $1.13bn, waives two conditions, May 16, 2010).
IMF reduces debt on condition of selling profitable state owned enterprises at very low prices. 

(Pakistan To Privatize 23 Companies In The Next Nine Months, March 06, 2010) 

Federal Minister for Privatization in Pakistan, Senator Waqar Ahmad Khan said here on March 5 that out of 58 State Owned Entities (SOEs), 23 were being privatized on fast track basis through public private partnership. According to a press release, chairing a meeting for privatizing some entities of PEPCO (DISCOs) in Lahore, the federal minister said these companies were being restructured, reorganized and revalued to assess their true potential before taking them to the market.

Waqar said that Boards of Directors of these entities were also being changed to bring in respective professionals and experts for the progress and growth of these entities. Keeping in view the keen interest being shown by the world’s top investment houses and business groups, the ministry has expedited the privatization process, he added. Secretary Ministry of Privatization, Shahab Khawaja, MD, PEPCO, senior officials of PEPCO and ministry were also present during the meeting.

The cabinet has approved to privatize 58 state-run enterprises and the process will be completed in nine months, Federal Minister for Investment and Privatization Senator Waqar Ahmad was quoted by a private TV channel as saying. The companies are Morafco Industries Ltd. (KASE:MOIL), The Pakistan Tourism Development Corporation, Faisalabad Electric Supply Company Limited, National Power Construction Corporation (Pvt) Limited, Pakistan Machine Tool Factory (Pvt) Ltd., Peshawar Electric Supply Company Limited, Pakistan Mineral Development Corporation, SME Bank Ltd., Hyderabad Electric Supply Company Ltd., and Quetta Electric Supply Company Ltd.

Source :

ISLAMABAD -(Dow Jones)- Pakistan [Friday April 23, 2010] gave the go-ahead for the privatization of Jamshoro Power Company and two other state-run firms as the country looks to reduce its heavy debt burden.

The federal government will sell stakes in SME Bank and Heavy Electrical Complex, as well as Jamshoro Power, the Privatization Commission Board said in a statement.
Minister for Privatization Waqar Ahmed Khan said third party valuation of the companies should be carried out to correctly assess their worth.

Pakistan, which has been crippled by continuing violence and unrest, relies heavily on grants from global multilateral funding agencies and friendly nations.

The World Bank has shown an interest in funding work to rehabilitate Jamshoro Power before the government sells its stake, the statement said.

The board has also decided to revalue National Power Construction Company, it added. (Islamabad Bureau; Dow Jones Newswires)

WASHINGTON: The International Monetary Fund (IMF) said on Friday [May 14] that its executive board has released a loan of 1.13 billion dollars to Pakistan. (Dawn News, May 16, 2010).

IMFs agreements have been put in effect by previous governments and now current government (Zardari, 2008) has applied to IMF for assistance.

Due to lack of transparency, no one has the knowledge of contracts, which have been signed in telecommunication, power and oil-gas sectors.

After the period of dictator in 1977-88, every government inherited the debts of its predecessor. There is always another solution instead of begging for financial assistance from the West. Otherwise, the federation will never be able to make decisions independently and future generations will always be paying debts. (Atif Abbas, Economic Restructuring in Pakistan, March 12, 2009).

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