How public-private partnerships caught the cold of inefficiency
The public-private partnership model has met a mortifying fate in Pakistan, particularly in Punjab, where 56 companies, established under this concept, instead of thriving, caught the crippling cold of inefficiency, to join the ward of terminally ill public sector entities, chronically on life-support at the taxpayers’ expense. Let’s find out who brought the virus to public-private companies. It has been established that as far as business operations are concerned the private sector operates much more efficiently than the public sector. The human resource hired by public and private sector has same qualifications.
Public sector sponsors that are actually government servants have no personal stake in the enterprise and are immune to real accountability. The government books the losses year after year without daring to remove a single employee. The success of the enterprise is essential for the sponsors, who have committed their hard-earned resources to operate successful commercial venture. The workforces in private enterprises are accountable for any inefficiency. There are some very successful examples of public-private partnership. The Lahore-Islamabad Motorway is one.
The government lacked the resources to finance this project and the private sector was permitted to undertake and complete it. After completion of the motorway the financing party was handed over the operational ownership of motorway for a certain period during which it collected the toll tax from vehicles using the new road for an agreed period. Both the government and the financer agreed to a certain period during which the financer was supposed to recover its investment along with reasonable profit. After completion of the period the motorway was handed back to the state. This public private partnership is called BOT (build, owner and transfer).
The other aspect of this partnership is the government provides the resources and the private sector experts are asked to execute the project and operate it. Sundar Industrial Estate (SIE) was established under this concept from the seed money provided by the Punjab government. The board of SIE was predominantly from private sector all the decisions were subject to the approval the board. Sundar was envisaged by Jehangir Tarin in Punjab when Pervaiz Elahi was the chief minister.
After the successful launch of Sundar and revamping of Multan Industrial Estate, Tarin and Elahi developed differences. The management of the industrial estate was handed over to a retired bureaucrat, while the board picked by Tarin was removed. The progress on industrial estates slowed down after that. The same concept was carried on large scale by the Shabaz Sharif-led government in his second tenure as chief minister Punjab. This time around almost all the chief operating officers of these companies were mid-level bureaucrats with the board having equal or in some cases higher representation from the private sector.
These boards were not independent. The right to appoint the chairman of the board and the chief executive officer (CEO) was in the hands of Punjab government. This diluted the authority of all boards of public-private partnership based companies. To further tighten its grip on affairs of each company the provincial government ascertained that no meetings could be conducted in the absence of public sector board members. This way the government ensured that no legal board meeting takes place if it asks the public sector board members to refrain from attending the meeting.
The most detestable aspect of the whole exercise was that almost all the CEOs were appointed from among the bureaucrats. A person drawing Rs100,000 per month in the Punjab government as officer in grade 19 was hired as CEO after ‘due process of recruitment’ on 10-12 times higher salary. In fact, when asked as to how come only bureaucrats got the top posts when far better qualified private sector candidates were also vying for those positions, a top Punjab bureaucrat said,”
All recruitment rules were followed and these bureaucrats were deemed more fit for the job”. If the bureaucracy was teeming with such highly competent officials in Punjab then why did they fail to deliver in their government departments? Most of the companies established by the previous regime were supposed to speed up the service delivery to the common person, but these individuals (bureaucrats) also failed to deliver there. They, in fact, operated these companies with the same bureaucratic red tape that was their hallmark in their government departments.
They successfully converted some competent private sector human resource to typical bureaucracy. Another point worth noting is that these 56 companies were flooded with friends, cronies, and relatives of their CEOs. The inductions were done carefully so as to leave no trace. On verbal recommendation of say the CEO of Company A, the Company D would accommodate the person. The D’s favorite would be adjusted by the H and the Y’s favorite would find a job in A. This way an untraceable web of nepotistic appointments was created turning all the public-private partnership based companies into failed public sector enterprises.