Islamic Republic of Pakistan

In the Islamic Republic of Pakistan, energy acts as an integral pillar of all economic activity. Energy is the resource that enables the sustainability of the world's 26th largest economy ("Embassy"). It acts as the necessary component that facilitates the production of goods and the provision of services in Pakistan that accumulate towards a Gross Domestic Product of $452.7 billion as of 2008. ("CIA").

One of the vital components of this energy sector is Pakistan State Oil (PSO). PSO is the largest oil marketing company in Pakistan. With an annual turnover of $6.8 billion and a commanding market share of 66% as of the fiscal year of 2007, it can be classified as one of Pakistan's biggest public assets ("Pakistan"). The government currently owns 54% shares of PSO and is anticipating selling 51% shares to a private company.

2.1 Aim

The aim of the essay is to assess this decision of the government and to answer the following formulated research question:

To what extent will the proposed privatization of Pakistan State Oil be beneficial to the long term economic growth in Pakistan?

Since PSO

is the biggest oil marketing company in Pakistan it has a significant impact on the Pakistani economy. The decision to privatize a firm of this magnitude involves the interests of a wide array of stakeholders from the firm itself, its employees, the government, various industrial clientele from the marine and aviation industry for example, and finally the average retail customer. The significance of the privatization and the effect it has on each stakeholder makes the findings of this investigation very useful.

2.2 Methodology

In order to answer the research question, the impact that the privatization will have on each of the main stakeholders being affected will be assessed. This will be done by examining the main advantages and disadvantages associated with the privatization of the firm.

Ever since the talks about privatizing PSO were initiated, an ongoing debate has begun between each and every Pakistani who represents different interests and concerns. Those in favor of privatization believe that a more competitive market structure in which everyone is efficiently producing is created, thus benefiting the consumers, or the people of Pakistan in the form of higher quality and better services. Simultaneously, the fiscal debt is reduced from the sale of the corporation. Lastly, they also stress that the privatization will encourage much anticipated foreign direct investment (FDI) into Pakistan. On the contrary, those against the privatization of PSO believe that a well-performing

and profitable public corporation like PSO should not be privatized at all. The other concern is regarding the numerous

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