Finance Minister Muhammad Aurangzeb said on Monday that Pakistan hopes to raise more than $1 billion by privatising another five to six state-owned entities. Speaking in Bangkok during the IMF-World Bank meetings, he said roughly a dozen entities remain in the pipeline, including power distribution companies and airport operations. The announcement follows the transfer of management control at PIA earlier this year.
Pakistan’s state-owned enterprises remain a substantial fiscal burden, although the picture is not uniform. Loss-making SOEs posted combined losses of Rs 832.8 billion in FY25, while profitable entities earned Rs709.9 billion. Several state companies continue to make money, and therefore, the problem lies with enterprises that repeatedly require guarantees, subsidies or balance-sheet support without offering a convincing path back to commercial health.
PIA offers a useful lesson. Its privatisation was never simply about the cheque written to the Treasury. A substantial part of the winning consortium’s commitment involves fresh capital going into the airline itself. That matters because a business starved of investment can remain weak even after ownership changes. The government should be looking for buyers able to repair an enterprise, not merely those willing to pay the highest upfront price.
The next transactions will be harder. Electricity distribution companies operate in markets where consumers cannot simply take their business elsewhere when service deteriorates. Private ownership does not cure monopoly power. If regulation remains weak, consumers may simply exchange a public monopoly for a private one. Investor interest in the first batch of DISCOs is encouraging, but the eventual deals will have to be judged by lower losses, better recoveries, fresh investment and improved service rather than the auction price alone.
Pakistan has missed plenty of privatisation deadlines over the years, but completing a poor transaction merely to show progress would be worse than waiting for a defensible one. The same caution applies to airports and valuable real estate such as the Roosevelt Hotel. These are not all versions of the same problem. A chronically loss-making company may need to leave state ownership because taxpayers keep carrying it. Still, a valuable property requires patient value maximisation.
That is where the government should keep its eye. If an entity leaves state control but its liabilities, regulatory privileges or recurring costs remain with taxpayers, little has changed beyond the name on the ownership papers. A successful sale should leave the buyer with a viable business and the state with one less commercial problem to finance. *
