PUBLIC, PRIVATE AND PUBLIC-PRIVATE PARTNERSHIP ANALYSIS

 

MEANING OF PUBLIC SECTOR, PRIVATE SECTOR AND PUBLIC-PRIVATE PARTNERSHIP  

Public Sector 

Public sector includes all the organizations and enterprises that are owned and controlled by the government. It can be called as the part of the economy that is controlled and managed by the state itself. It is also financed by the government. Typically, it includes public goods and governmental services such as public education, law enforcement, military, infrastructure, health care etc.  

Private Sector 

Private sector includes all the organizations and enterprises that are privately owned by individuals. It is also referred to as the ‘citizen sector’. These organizations have no link to the government. The government is not responsible for financing them, rather the person or party that owns them is responsible for financing it and dealing with its day to day affairs. Private sector organizations are mostly run for profit, but they can be non-profit as well. The private sector is an important part of an economy.  

Public-Private Partnership 

In public-private partnership, there is a form of collaboration between a government organization and a private company. They both finance the projects of the enterprise, and both are responsible for dealing with its day to day affairs. Through such a partnership the projects get completed sooner than usual as both the parties give their time to it. 

CONDITION OF ALL 3 IN PAKISTAN 

Now, we will be having a quick look on the current condition of all three sectors in Pakistan. 

Public Sector 

In Pakistan, the condition of public sector organizations is not very good. Their efficiency level is low, and people usually do not prefer public organizations. Following points explain the condition of public sector organizations in Pakistan: 

• Inefficient 

Most of the time, the public servants are not professionals or experts in their field which affects the overall efficiency of the organization. As the main motto of public organizations is social welfare so this decreases their ability to compete with others. They do not run to earn profit which results in lack of competition and ultimately inefficiency.  

• Service Delivery 

Mostly in public organizations in Pakistan, the service delivery is very poor. The customers are not dealt with properly. In government institutions, there is a trend of ghost schools. There are around 11,000 ghost schools in Sindh. 

• Time for Making Decisions 

One of the biggest problem with these organizations is that there is a delay in the process of decision-making. No one owns the matters of organization and no one takes the responsibility of decision-making. As a result, the whole enterprise suffers from loss. 

• Government Control 

Public enterprises are controlled entirely the government. The government interferes in each and every petty decision of the organization. This is another reason for its delayed decision-making. 

• Lack of Resources 

Public organizations sometimes lack the capital resources or even if they are present, they are not fully utilized to their capacity. We often come across problems like shortage of power, equipment breakdown, inadequate raw material etc.  

Following are some of the main public organizations working in Pakistan: 

1. Capital Development Authority 

2. National Highway Authority 

3. National Radio Telecommunication 

4. Oil and Gas Development Company Ltd. (OGDC) 

5. Pakistan Automobile Corporation Ltd. (PACO) 

6. Pakistan Post Office Department  

7. Pakistan Railways 

8. Pakistan Telecommunication Authority (PTA) 

9. WAPDA (Water and Power Development Authority) 

10. Pakistan State Oil Company Ltd.(PSO) 

Private Sector 

Private sector organizations are comparatively in good condition as compared to the public ones in Pakistan. That’s why people prefer the private sector over the public sector. In Pakistan, its condition can be explained through the following points: 

• Profit Motive 

Mostly, the main motto of the private sector organizations is to earn profit. Private companies make more profit than the public ones. This gives more return on the capital. There are some examples of private organizations which are not-for-profit. One of these is Shaukat Khanum Memorial Hospital which depends on zakat, sadqa and donations to provide free treatment to the needy. In 2018, the hospital provided free treatment to 75% of the patients. 

• Major Sectors 

Private sector comprises some of the most major sectors of Pakistan which have been running successfully. According to Asian Development Bank, 100% of the textile and telecommunications sector, over 77% of the commercial banking sector, and a significant part of the cement, sugar, automobile and fertilizer sector is included in the private sector in Pakistan. 

• Independent Management 

The management is entirely done by the sole owner of the organization or the group of directors who are elected representatives of the shareholders in case of a joint-stock company.  

• Competitive Culture 

The work culture within a private organization is very competitive. The career growth of an employee depends on his performance which motivates him to do better every day. This creates a healthy competitive environment for the employees to work harder. 

• Private Finance 

Private companies are fully financed by their owners and shareholders. They take little or no funds from the government depending upon how significant they are for the country. 

Following are some of the main private organizations working in Pakistan: 

1. Bank Al Habib  

2. Mars BPO Pvt Ltd 

3. Beaconhouse School System 

4. Lahore College of Arts and Sciences 

5. Agha Khan University 

6. Airblue 

7. ARY Digital Network 

8. The Educators  

9. Al-Khidmat Foundation  

10. Askari Bank. 
    

Public-Private Partnership 

Public-Private initiatives are strongly supported by the government of Pakistan. In 2021, Public Private Partnership Authority (Amendment) Act was passed which strengthened the legal and regulatory framework for implementing the PPPs (Public Private Partnerships). This also helped in promoting private sector investments into the infrastructure of the public sector. In Pakistan PPPs have been traditionally common in the transportation sectors, energy, and power generation. Recently, the government has committed that will be used in more sectors such as technology, aviation, tourism, and healthcare. 

Following are some of the main (PPPs) organizations working in Pakistan: 

1. Combined Effluent Treatment Plant (CETP) At Quaid-e-Azam Industrial Estate (QIE) 

2. Punjab Vehicle Inspection Certification System (VICS) 

3. Installation and O&M of water meters in lahore 

4. Tourist Resort/Entertainment Park At Uchali Lake, Soon Valley, District Khushab 

5. Model Town Housing Scheme, Sargodha 

6. Gwadar solar PV Plant 

7. Matiari-Lahore Transmission Line 

8. Citizen Facilitation and Service Centers in Southern Punjab 

9. Sports Complex, Multan 

10. Food Grain Silos in Punjab 

Also, there are some great benefits of PPP which are given in the image below:

After studying all 3 forms of sectors and their conditions in Pakistan, I think the best one is Public-Private Partnership. It would help in improving the public services delivery by implementing the practices of the private sector. This would ultimately increase growth and provide more job opportunities for people thus opening the doors to employment. The organizations and projects under PPPs attract private investments and increase efficiency by motivating them for profit. The sectors which are in poor condition due to lack of funds can also be improved through this.  

By:

Ramish Hina Faryal

BS. 6th/ GPP Morning

 

References: 

Public-Private Partnerships Definition. (2021, January 23). Investopedia. https://www.investopedia.com/terms/p/public-private-partnerships.asp 

Public–Private Partnership Monitor: Pakistan. (2021, September 6). Asian Development Bank. https://www.adb.org/publications/public-private-partnership-monitor-pakistan#:%7E:text=From%201990%20to%202019%2C%20Pakistan,Authority%20(Amendment)%20Act%202021. 

Shaukat Khanum Memorial Cancer Hospital & Research Centre » Shaukat Khanum Zakat Campaign 2018. (n.d.).  https://shaukatkhanum.org.pk/shaukat-khanum-zakat-campaign-2018/ 

Public-Private Partnership (PPP) : The Way Forward

 Pakistan is a developing country facing numerous social and economic issues. It is a democratic country where citizens are electing government in a hope to make their living standards better. But sadly, during the last few decades, the standard of living in Pakistan has declined. According to Human Development Index of 2019, Pakistan is ranked at 147^th out of 170 countries, indicating low human development. The total population of Pakistan is 220.9 million. (World Bank, 2020). Government is facing numerous challenges to facilitate its citizens with limited resources. Pakistan's public services continue to be plagued with failure. Whether it's in the areas of health, education, water supply and sanitation, or security, successive governments have failed to offer a fair level of service to the general public. The type of service delivery includes health, education, infrastructure, transportation etc. These services are provided by public sector, Private sector or a collaboration between Public and Private Sector known as Public-Private Partnership (PPP).

Public Sector

It is the part of an economy which is controlled or owned by the government. (Merriam-Webster). In Pakistan, the quality of public services provided by Government keeps deteriorating. Public services benefits more to rich than the poor. For example, in public hospitals poor people wait in long queues while the rich and influential people easily get their appointments.  The public sector of Pakistan lacks efficiency, accountability and transparency. There are numerous cases of corruption in public sector of Pakistan.  According to CPI (Corruption Perception Index), 2020 Pakistan is ranked at 124 out of 179 countries. There is no accountability in public sectors. According to AGP (Auditor General of Pakistan), more than 2 dozen state entities refused to audit their accounts. This includes National Bank of Pakistan, the ministry of religious affairs, the ministry of water resources, Pakistan Railways, Peoples Primary Health Initiative Baluchistan, the Khyber Pakhtunkhwa Oil & Gas Company and the Labour Department of KP.  Most of the time, public officers take bribes to get the work done in Pakistan. One of the main problems of poor service delivery is the dishonesty of public officers with their duties. In Sindh there are more than 11,000 Ghost schools. Teachers are receiving salaries from Government but they are not teaching any students. These teachers are only burden on state’s limited resources. According to The Express Tribune, in rural Sindh, there are 1.8 schools for every 1,000 kids. Only 15% of primary and secondary schools have two teachers. Not only that, but the schools are also lacking in fundamental necessities. A large percentage of schools lack basic amenities such as drinking water, toilets, playgrounds, and boundary walls. No doubt public schools are affordable than private schools but their quality of education is not good. Public schools in Pakistan lack trained teachers and basic facilities. Also, Pakistan has a very weak infrastructure. The poor quality of water supply and sanitation services have led in the spread of illnesses such as hepatitis-C and other diseases. People are also facing issues because of load shedding of Electricity and Gas.

Some Public sectors have made efforts to improve their services like Nadra, Pakistan Post office. Government has also taken some good initiatives for the welfare of the public like Pakistan Citizen Portal, Metro Bus, Ehsaas programme, Sehat Sahulat programmes. But still efforts are required from Government to ensure efficiency, transparency and accountability in Public sectors.

Private Sector

The private sector is the part of the economy that is run by individuals and companies for profit and is not state controlled. Therefore, it encompasses all for-profit businesses that are not owned or operated by the government. (Investopedia,2020).  In contrast to public sector, private sector is more efficient and accountable. Though private sector’s services are more expensive but the quality of service is very high as compare to public sector. Since independence Pakistan has relied more on Private sectors for production of goods and services. In Pakistan today, over 77% of the commercial banking sector, 100% of the textile and telecommunications sector, and a significant part of the cement, sugar, automobile and fertilizer sector are in the private sector. Within infrastructure development, besides telecommunication, the private sector has been active in the power sector. It is a major contributor to power generation and has also entered into the electricity distribution sector after the privatization of the Karachi Electric Supply Corporation (KESC). Private sector spending generated over 80% of Pakistan's GDP growth rate, followed by public sector consumption, which contributed only 13% every year to maintaining growth pace.

Pakistan has large private health sector. According to official mapping studies, more than 70% of health consultations take place in the private sector, and more than 90% of total clinics/first-level care facilities are in the private sector, according to national surveys. Shaukat Khanum Memorial Cancer Hospital is providing free cancer treatment to people who are unable to afford it. Shaukat Khanum, Lahore has examined over 75% of cancer patients for free. In 2017–2018, 72 percent of patients were treated completely free of charge at the hospital. Even in the education sector, private schools and colleges have been proved to be delivering more quality of education than public sector. Most of top educational institutions of Pakistan are Private such as Agha Khan University, LUMS, Beacon House School. But keeping in view the situation of Pakistan, only small portion of population of Pakistan is able to have access to these institutions. Most of the people of Pakistan cannot afford to get their children admitted to these schools. Also the treatments at most of the private hospitals are very expensive for the poor people. We need Public-Private Partnership to facilitate the citizens of Pakistan.

Public-Private Partnership

Public-private partnerships involve collaboration between a government agency and a private-sector company that can be used to finance, build, and operate projects, such as public transportation networks, parks, and convention centers. (Investopedia,2021). Pakistan is facing enormous deficiencies in it infract structure, energy and education sectors. Government can improve their quality of services by collaborating with private sector. In many PPP projects, the private sector arranges and finances the project. This eliminates the need for the government to cover its finance needs through its own revenues (taxes) or borrowing. Collaborations between private firms and governments benefit both parties. For example, private-sector technology and innovation can aid in improving the operational efficiency of public-sector services. For its part, the public sector creates an incentive for private sector to complete projects on time and on budget. Furthermore, expanding the economy makes the country more competitive in terms of promoting infrastructure development and boosting relevant construction, equipment, support services, and other industries. Pakistan's government is a big supporter of public–private partnerships (PPPs). Between 1990 and 2019, Pakistan saw 108 financially completed PPP projects, totaling $28.4 billion in investment. The energy industry accounts for almost 88 percent of these projects, drawing more than $24.7 billion in investment, followed by investments in the port sector. In early 2021, the parliament approved the amendments to the 2017 PPP Law, enacting the Public Private Partnership Authority (Amendment) Act 2021. This improves the legal and regulatory environment for creating and implementing PPPs, hence encouraging private sector investment in public infrastructure and related services. There are many projects under PPP;

•         the construction of the Sukkur Hyderabad Motorway
•        the construction of the Sialkot Kharian Motorway (expected cost around US$225 million);
•        the construction of a teaching and research hospital;
•        the construction of an innovation’s ecosystem (science and technology park);
•        the conversion of a guesthouse located in Lahore (the provincial capital of Punjab province) into a hotel;
•        the creation of a mass transit facility in a major city, the Karachi Circular Railway; and
•        the modernization of the current Karachi–Pipri Rail Track.

Government of Punjab has also launched Public Private Partnership Cell. Under its Punjab Vehicle Inspection Certification System (VICS), Flyover Over Railway Crossing Khana Kachha Lahore, Lahore Ring Road Southern Loop (SL-I & SL-II) have been made successful through Public Private Partnership.

So, in my point of view, Public-Private Partnership is the key to Pakistan’s development. Pakistan has a very strong private sector. Government should take initiatives to collaborate with Private sector not only for the development of the infrastructure but also for development of the Education and Health sectors.

REFERENCES

https://www.researchgate.net/publication/316856423_PUBLIC-PRIVATE_PARTNERSHIPS_IN_PAKISTAN_A_NASCENT_EVOLUTION

https://thelawreviews.co.uk/title/the-public-private-partnership-law-review/pakistan

Malaika Ali 

Bs 6th Morning

NUML, Islamabad.