Islamabad: During a recent virtual address at the ‘Directors Summit 2024,’ Zafar Masud, Chairman of the Oil and Gas Development Company Limited (OGDCL), stressed the necessity of strengthening regulatory frameworks before proceeding with the privatization of state-owned enterprises, particularly in the energy sector. He highlighted that without proper regulatory oversight, privatization could result in damaging monopolies that negate the intended benefits of enhancing efficiency in public services.

According to Oil and Gas Development Company Limited, Masud detailed the ongoing financial difficulties within the energy sector, emphasizing that the privatization of distribution companies (DISCOs) should be approached with caution. He criticized the quick-fix mentality often associated with privatization and warned against adopting a “pigeon-approach” which assumes that problems will vanish if ignored. The Chairman argued for a systematic strengthening of regulatory frameworks to prevent private sector monopolies that could ultimately harm the public interest.

Masud also underscored the importance of selecting appropriate private sector partners for privatization efforts, advocating for entities with a commitment to societal impact and long-term sustainable practices over those driven by short-term profits. He expressed concerns over choosing partners like private equity funds, which might prioritize immediate financial returns at the expense of the utility’s long-term viability.

Furthermore, he pointed out the crucial role of governance structures in both state-owned and private enterprises, suggesting that no amount of capital would resolve the systemic issues plaguing state entities without effective governance. Masud welcomed the introduction of the SOE Law aimed at improving governance standards, but he remarked that such measures should be seen as steps toward more comprehensive solutions involving privatization or public-private partnerships. He emphasized the need for independent regulators to ensure these transitions do not compromise service quality or public accountability.

“Strong governance is crucial to unlocking the true potential of SOEs in Pakistan,” Masud concluded, highlighting their significant contributions to employment, infrastructure development, and economic stability.