Challenges of Privatization in Pakistan's State-Owned Enterprises

A recent analysis reveals that political interference and poor governance are leading to significant losses in Pakistan's state-owned enterprises, which are often sold off at low prices. The article discusses the recurring pattern of neglect and mismanagement, highlighting the case of PIA and the flawed privatisation process. It also examines the misleading assumption that privatisation benefits consumers, using examples like K-Electric and British rail to illustrate the complexities involved. This overview raises critical questions about the effectiveness of privatisation as a solution to economic challenges in Pakistan.

By Narendra Chaudhary Jan 15, 2026, 15:50 IST

Governance Issues in Pakistan's State Enterprises

New Delhi, Jan 15: A recent report from Pakistani media highlights that poor governance and political interference are causing significant losses in the country's state-owned enterprises, which are then sold off at drastically reduced prices.

According to an article in the Express Tribune, successive governments have consistently delayed necessary reforms, opting instead to maintain state-owned enterprises despite their declining performance and lack of accountability. It is only after these entities have incurred substantial losses and unsustainable debts that privatisation is considered.

This troubling trend is evident across various sectors. Political appointments often replace professional management, leading to a decline in commercial discipline and the normalization of inefficiencies. The article argues that the sale of these companies, after years of neglect and public funding, results in socialized losses while privatizing profits.

Privatisation in Pakistan has seldom been a strategic economic reform; rather, it has often resembled a series of hurried sales.

The case of Pakistan International Airlines (PIA) exemplifies this issue. Once a reputable regional airline, PIA has suffered from overstaffing, political interference, and a lack of business acumen. Governments have historically viewed the airline as a patronage tool rather than a commercial entity, leading to billions spent on its survival while service quality plummeted. Its eventual privatisation was not a strategic move but rather a recognition of ongoing governance failures.

Proponents of privatisation frequently cite the example of Pakistan Telecommunication Company Limited (PTCL) as proof that private ownership enhances performance. While PTCL did see operational and technological advancements post-privatisation, this case also reveals significant flaws in Pakistan's privatisation approach. Years later, many former government employees and pensioners remain embroiled in legal disputes regarding pensions and post-privatisation rights, indicating that human and legal costs were not prioritized.

Moreover, the assumption that privatisation leads to lower consumer prices is misleading. Pakistan's experience contradicts this notion, as evidenced by K-Electric, where electricity tariffs have surged to unprecedented levels following privatisation. Without effective regulation, privatisation often merely substitutes a public monopoly with a private one, frequently resulting in greater pricing power and diminished accountability.

The article also references the British rail system, which, after privatisation, has become fragmented, plagued by delays, high fares, and outdated infrastructure. In contrast, European nations like Germany and France, which have maintained public ownership, operate modern, efficient high-speed rail networks that outperform Britain's privatised system.