Privatization risks

This letter refers to the news report ‘Another proposal to split up PIA under study’ (September 28, 2023). The idea discussed in the report is not new nor out of the box. But the question naturally arises as to what is inherently wrong with PIA, which was once the pride of the nation? While poor management may partially be blamed, the fallout of a state mired in its own survival challenge cannot be ignored. The airline has also been a victim of political interference by several governments

Privatization is not an easy task as there may be few takers owing to economic and political challenges. In the case of the power sector, the government lured domestic and foreign investors by offering dollar-based returns, a decision that has done irreparable damage to the economy. No such mechanism can be put in place for PIA. There is no large business group in Pakistan that could buy PIA and any foreign investor that does so would be repatriating profits in dollars out of the country’s reserves each year like the IPPs. One must therefore not lose sight of the long-term implications of privatization.

Arif Majeed

Karachi