INP-WealthPk

Privatisation of Loss-Making Enterprises Stressed, Says A Business Magnate

June 02, 2022

By Syed Marwan Shah ISLAMABAD, June 02 (INP-WealthPK): It’s not the job of the government to run enterprises and businesses as so many things are involved in such operations which often result into losses, says a leading business magnate. Mian Muhammad Mansha, Chairman and CEO of Nishat Group, a Pakistani multinational conglomerate, said while addressing an event organised by the Pakistan Institute of Development Economics (PIDE) that Pakistan is facing losses of about $3.5 billion annually to bridge the deficit of state-owned enterprises (SOEs). He suggested that the loss-making SOEs must be privatised to save the national exchequer from further loss. “The Pakistan International Airlines (PIA) and Pakistan Railways are main examples of cash-bleeding enterprises. Railways used to be a profitable organisation, but unfortunately, we have made a mess of it also,” he stated. He mentioned that when Margaret Thatcher became prime minister of England, the Railways was making continuous losses, so she privatised it. “Privatisation of Railways should not be a complicated exercise. Any company can get a rail track on lease or through any other arrangement, and run trains on it. In the United Kingdom, various trains run on the track, such as Charles Bronson Trains Scottish and Mandalay’s Trains. All these trains are run by private companies, while we have an expensive railway system,” he pointed out. “In the same way, the PIA is not running on professional lines. Not only the airline, but all the airports must be privatised,” he suggested. Mian Mansha again referred to the UK and said Heathrow Airport is privatised and run by a Spanish company. He said all problems related to the loss-making enterprises can be resolved with good governance, and that will come with privatisation. He said the huge losses caused by the PIA, Railways, and power distribution companies can be halted through privatisation, while the privatisation proceeds can give some much-needed support to the country’s forex reserves. WealthPK research indicates that due to PIA’s poor management and bad performance, the national flag carrier suffered a net loss of Rs50.1 billion in the calendar year 2021, while the accumulated losses surged to over Rs565 billion. These figures show that privatisation may be the most viable solution to correct the state of affairs.