Part II of the three part series against privatisation policy in Pakistan. The first part can be accessed here. Part II appeared in The News on Sunday on December 01, 2014 (http://tns.thenews.com.pk/the-basis-of-historical-evidence/)
The Pakistan Muslim League-Nawaz government has listed some 31 state-owned enterprises (SOEs) for privatisation in the near future. There is no information available at the moment about the modalities of the process but, most likely, it will be along the lines of the procedure followed at the time of privatising Pakistan Telecommunication Company Limited (PTCL) when the government technically only ‘partially’ privatised the SOE but gave up its control over the management of the company. This is how it works.
Government offers 26 per cent shares with management control in these companies to private investors and retains a maximum of 74 per cent shares with it. The management control is given by writing down in the contract that each 1 per cent of the privately owned share carries 4 votes (as opposed to 1 vote for each percentage point of the remaining 74 per cent) in the board of directors (BoD) of the privatised company. This way, the minority shareholder private company (or consortium) commands 104 votes in the BoD and hence also manages the daily and other affairs of the company.