State Owned Business in Pakistan: Losing Money all the Time

What do you expect from planes that are around 25 years old and carry a staff that is four, sometimes more than five times that is required to be there during a flight? This is exactly what is happening with the state owned Pakistan International Airlines that is losing money with every flight rather than adding to the coffers of the newly elected government. PIA is today symptomatic of the economic challenges faced by Pakistan’s economy in general, and the new PML government headed by Mia Nawaz Sharif in particular.

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Nawaz SharifYou can imagine the state of affairs with aircrafts that are aging and not in the best of health, overstaffed planes and the ground crew, flights that are running late all the time, and flights that are costing much more than they are earning. In the last few years, PIA has been losing hundreds of millions of dollars every year. If we talk of all state owned businesses, the total loss amounts to a whopping $4 billion. Governments in Pakistan have been covering up these losses by plugging the holes in the form of loans, loan waivers, grants and cash injections. However, these losses by state owned businesses pale in front of a $5 billion debt inherited by the Nawaz government in the power sector. The situation in power sector is so bad that there are parts of Pakistan that go powerless for as many as 20 hours a day.

The newly elected government has made it clear that dealing with these sick industries and enterprises is its priority. It says it would do anything that is in its power to rescue and reform these businesses and also privatize many of them if possible. Many political analysts feel that Nawaz can take strong measures to put state run enterprises back on track as this government is not running on any crutches and there are no coalition partners as well to pressurize the government. However, even these experts feel Nawaz would not go too far on reform process for the fear of losing popular support. As such any measures taken by the government would remain half hearted and bring in limited results only.

Rich and the powerful class in the country that has business interests in many industries is certain to oppose vehementlypakistan-airlines-airplane any corrective measures announced by the newly elected government. It is not just oil and iron and steel in addition to power and transport that are state owned in Pakistan as there are virtually all industries that are being run by the governments as successive governments have used these enterprises to create jobs for supporters. Pakistan Railways is a prime example of poor and corrupt administration. While there were more than 400 passenger trains running in the country a few years ago, there are hardly 80 running today. The government has to however look after a massive number of railway employees who often have nothing to do as work.

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People in Pakistan are looking up to this government impatiently for some drastic measures.