It has been publicly reported that the Fauji Foundation of Pakistan is foremost amongst the bidders for the soon-to-be-divested Pakistani State Oil (PSO) enterprise. Before one starts to question the logic of Fauji Foundation buying out PSO, it is worth considering why PSO is being sold in the first place. Along with the Oil and Gas Development Company (OGDC), PSO is one of the few profitable state-owned enterprises in the country, and in fact generates substantial profits for the national exchequer.
The International Monetary Fund (IMF), which has pushed long and hard for the privatisation of OGDC and PSO, typically claims that privatisation of state owned enterprises (SOEs) in poor countries such as Pakistan is necessary to address major structural inefficiencies in the operation of such enterprises, or, in other words, to extricate them from perennial losses. Therefore, the offloading of PSO and OGDC to the private sector would appear to be rather unjustified given that these enterprises have been raking in profits consistently in recent years.
The IMF, and its sister institutions, have also made a point in recent times to emphasise the fact that the Pakistani state does not have satisfactory revenue-generating capacity, and has demanded unequivocally that revenues be increased through a variety of means. On the ground, it has been the imposition of general sales tax (GST) on a number of basic commodities that has been the main source of increased revenue in recent times. Given that the resulting price increases of basic commodities have had clear poverty-enhancing impacts, particularly over the past four years, it is intriguing that enterprises such as PSO and OGDC are being offloaded, as such divestments will surely transfer the revenue-generating burden onto the poor.
The contradictory claims of the international financial institutions (IFIs) aside, the fact of the matter is that there is a frenzied rush to capture and control oil and gas resources the world over. The invasions and occupations of Afghanistan and Iraq are clear examples in this regard. In countries such as Pakistan, where the comprador elite classes facilitate the capture of such resources, it is hardly necessary to resort to direct military intervention. In the case of PSO, the corporate interests of the local elite, i.e. the army, represent the only economic logic at work, and this is quite acceptable to the IFIs and the global financial elite at large.