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Privatization Pitfalls

Privatization efforts in Pakistan have historically failed or stalled due to political resistance, institutional weakness, and procedural inefficiencies.

By Asif Javed | September 2025


The Cabinet Committee on Privatization has approved the inclusion of 24 commercial state-owned enterprises (SoEs) in Pakistan’s Privatization Programme for 2024-29. The decision was subsequently ratified by the Federal Cabinet on August 13, 2024, signaling high-level government endorsement of the move. The inclusion of these SoEs, operating in various commercial sectors, reflects an effort to improve the efficiency, reduce the fiscal burden on the state, and attract private sector investment. This step marks a significant phase in Pakistan’s broader economic reform agenda. The government is expected to earn Rs. 86.6 billion from privatization proceeds in the next fiscal year.

Pakistan International Airlines (PIA), Rosevelt Hotel in New York, the First Women Bank, Zarai Taraqiati Bank (ZTBL), House Building Finance Corporation (HBFC), Utility Store Corporation (USC), State Life Insurance (SLIC), Jamshoro & Central Power GENCOs, LESCO, HESCO, MEPCO, PESCO, and other DISCOs are some of the major names in the privatization list. The privatization will be done in three phases. In the first phase, 12 institutions will be privatized, including PIA and engineering firms, insurance, power companies, and utility services. In the second phase, Postal Life Insurance will be privatized.

The International Monetary Fund (IMF) urges the federal government to accelerate the divestment (selling off) of SOEs and reduce the state’s role in the commercial sector. This means that the IMF wants Pakistan to move away from excessive government control over businesses and allow more space for the private sector to operate freely, which is typically seen as a way to improve efficiency, competitiveness, and fiscal sustainability. In response, Pakistani authorities have assured the IMF that they will complete the rightsizing of public sector entities by December 2025, which includes restructuring, downsizing, or privatizing inefficient state-run bodies. This is part of a broader reform agenda aimed at improving public sector performance, cutting losses, and meeting the conditions of IMF financial assistance or ongoing loan programs.

Privatization efforts in Pakistan have historically failed or stalled due to political resistance, institutional weakness, and procedural inefficiencies. One of the primary challenges has been strong opposition from vested interests, including labor unions and political actors, or public backlash. These pressures often lead to a lack of political will or policy reversals by successive governments. Legal hurdles and regulatory delays have further complicated the process, while the poor financial and operational condition of many SOEs has made them unattractive to private investors without prior restructuring.

The Privatization Commission has also struggled with limited institutional capacity, bureaucratic interference, and a lack of autonomy, weakening its ability to execute large-scale reforms. Past privatization deals have suffered from a lack of transparency and public trust, with accusations of underpricing and favoritism damaging the credibility of the process. Furthermore, frequent changes in policy direction and the absence of a consistent, long-term strategy have deterred both domestic and international investor confidence, ultimately contributing to the repeated failure of privatization initiatives.

Hence, Prime Minister Muhammad Shehbaz Sharif has instructed that the Privatization Commission be given full autonomy within the current legal framework to eliminate bureaucratic delays and inefficiencies that have hindered the privatization of SOEs. Prime Minister emphasized that the process must be carried out in a phased, transparent, and efficient manner to build public confidence and ensure the effective implementation of economic reforms.

The success of the privatization process largely depends on effective government reforms, operational efficiency, and phased divestment. Reforms such as depoliticizing management, improving transparency, and strengthening accountability are essential to stabilize SOEs and make them credible institutions. Once governance structures are in place, operational improvement can be implemented to reduce inefficiencies, cut financial losses, and enhance service delivery, thereby increasing the enterprise’s market value and attractiveness to investors. Only after these foundations are laid should the government proceed with phased divestment, allowing for a smooth transition, market readiness, and public trust. This structured approach ensures that privatization is not just a quick sale, but a strategic reform that transforms failing SOEs into valuable, competitive entities.


One of the major concerns associated with privatization is the risk of job losses, especially in overstuffed and inefficient SOEs. When these entities are restructured or sold to private investors, there is often a push to reduce costs, which can lead to layoffs or downsizing. This creates economic hardship for affected workers and their families and potential political backlash against privatization. To address this, the government must proactively implement safety nets and re-skilling programs to support displaced workers. By investing in re-skilling and job placement services, the government can help workers transition into alternative employment, reduce resistance to privatization, and ensure that economic reforms are humane and socially responsible.

In the past, privatization in Pakistan has been marred by accusations of favoritism and a lack of accountability, which has created deep skepticism among citizens and deterred serious investors.

Public-Private Partnerships (PPPs) can serve as a strategic alternative to complete privatization, especially in sectors where outright divestment may be politically sensitive or not feasible. This allows the government to leverage private sector expertise, investment, and efficiency without fully relinquishing control over strategic or essential services like healthcare, transportation, energy, or infrastructure. PPPs can help improve service delivery and reduce the fiscal burden on the government while maintaining public oversight and protecting broader social interests.

A transparent and depoliticized privatization process is essential to building public confidence and investor trust. In the past, privatization in Pakistan has been marred by accusations of favoritism and a lack of accountability, which has created deep skepticism among citizens and deterred serious investors. To avoid repeating these mistakes, the government must ensure that the entire process, from selecting enterprises for privatization to evaluating bids and finalizing sales, is concluded in a fair, open, and rules-based manner. Clear criteria, public disclosures, independent oversight, and competitive bidding can help demonstrate that decisions are being made in the national interest rather than for political gain. Depoliticizing the process also means insulating key institutions, like the Privatization Commission, from political interference so they can act independently and professionally. When privatization is seen as transparent and impartial, it enhances the government’s credibility, attracts reputable investors, and helps ensure that economic reforms are accepted by the public and deliver long-term benefits.

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