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 When the prime minister left the table, a colleague of former IBM
executive Zubair rushed to his side.
"Are you mad? Three privatization ministers have gone to jail and
most have corruption cases hanging over their heads," he said.
"Don't take this job."
But Pakistan's new privatization czar is determined to find buyers
for 68 public companies, most of them loss-making, including two gas
companies, an oil company, about 10 banks, the national airline and
power distribution companies — all within the next two years.
The government sees the sell-offs as a life saver for Pakistan's
$225 billion economy crippled by power shortages, corruption and
militant violence. Successful privatization is Sharif's top
political and economic goal.
"We lose 500 billion rupees ($5 billion) annually because of failing
enterprises," Zubair told Reuters. "Every day a file lands on a
bureaucrat's desk and he has to take a decision he isn't qualified
to. This can't go on, no matter what."
Pakistan can raise up to $5 billion in privatization revenue in the
next two years to ease pressure on strained public finance, Zubair
said.
Last September, the International Monetary Fund saved Pakistan from
a possible default by agreeing to lend it $6.7 billion over three
years. In return, Pakistan must make good on a longstanding promise
to privatize loss-making state companies.
Privatization officials, requesting anonymity, said several foreign
investors, including the World Bank's private-sector arm, the
International Finance Corporation, and the U.S. mutual fund Fidelity
Investments have shown interest in the companies.
But for Zubair, a former IBM chief financial officer for the Middle
East and Africa, the real challenge is overcoming resistance from
thousands of workers who will have to be laid off and opposition
parties who are against the plan.
Once a source of pride, Pakistan International Airlines is
struggling to stay aloft, having accumulated losses of more than 250
billion rupees. A quarter of its 40 aircraft are grounded. Flights
are regularly cancelled and engineers say they have to cannibalize
some planes to keep others flying.
Unions strongly oppose the privatization. The IMF wants the airline
partially privatized by December.
Another asset is Pakistan Steel Mills, which has accumulated losses
of more than 100 billion rupees. Overstaffed by at least three
times, employees haven't been paid since October.
"I should not use this word but what has happened is the complete
rape of this institution," said Zubair.
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An attempt to privatize the mill in 2006 was blocked by the then
chief justice. Foreign investment dwindled as deals got caught up in
court. Now, under a new Supreme Court chief, officials say the
prospects of reform have improved.
"NO MAGIC WAND"
Under IMF conditions, financial advisers must be hired to evaluate
the assets and examine accounts by June.
Zubair's daily work includes visits to opposition lawmakers,
parliamentary committees and unions to convince them of his plan.
But he has few takers.
"The answer to our current economic malaise lies not in hawking of
state-owned institutions but in restructuring these industries,"
Bilawal Bhutto, chief of the former ruling Pakistan People's Party,
wrote in a commentary.
Asad Umar, an opposition lawmaker and former chief executive of one
of Pakistan's largest conglomerates, said privatization was being
pursued on an unrealistic time frame and the criteria for
identifying entities was inconsistent.
For Umar, it makes no sense that on the list with a bleeding airline
are Oil and Gas Development Co. Ltd and Pakistan Petroleum Ltd ,
which made profits of 91 billion and 42 billion rupees respectively
in 2013, and have zero debt.
Not all sell-offs are expected to go smoothly.
A nine-year dispute between the government and Etisalat, the United
Arab Emirates' largest telecoms firm, over payments from the
privatization of Pakistan Telecommunication Company Ltd, is seen as
a discouragement for investors.
But Zubair says no plan is without risk.
"There is no magic wand to ensure that all these ventures will be
successful," he said. "But the bottom line is that I'm not going to
hold off privatization for anyone."
(Editing by Maria Golovnina and Robert
Birsel)
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