Federal cabinet to decide PSM fate: Fawad

ISLAMABAD: Caretaker Minister for Privatization Fawad Hasan Fawad Tuesday said the government was taking forward the privatization process in a transparent manner while guarding the public interest.

Addressing a news conference here along with Minister for Information Murtaza Solangi, he said the privatization of loss-making state-owned enterprises (SOEs) will enable them to compete effectively in the evolving global economy.

Fawad specifically noted that the privatization of Pakistan International Airlines (PIA) was aimed at bolstering the country’s aviation industry, positioning Pakistan as a potential regional aviation hub.

Regarding the Pakistan Steel Mills (PSM), the minister indicated the government planned to present the matter to the federal cabinet, which will then make a decision in due course.

He assured that a robust regulatory control regime would be in place to safeguard the public interest throughout the process.

Fawad expressed regret over the past governments’ failure to adequately address the country’s economic challenges and reminded that the privatization efforts commenced in 1994, with some cases still pending with the courts.

However, he reaffirmed the caretaker government’s commitment to fulfilling the responsibilities entrusted to it by the elected governments, emphasizing their adherence to the given mandate.

The minister disclosed that in 2020, the SOEs contributed to a 7 percent deficit in the Gross Domestic Product (GDP). Fifteen major SOEs were incurring losses amounting to Rs2 trillion, he added.

Fawad also highlighted that the government allocated Rs2.542 trillion to support loss-making SOEs between 2018 and 2022.

He underscored that these funds could have been allocated to advance national development projects such as the Bhasha Dam.

By the end of June 2023, the accumulated losses of PIA were recorded at Rs713 billion out of which Rs263 billion comprised debt. Besides, an additional amount of Rs13 billion was provided by the banks on government guarantee, he said, adding the government also provided Rs150 billion from its own resources.

The minister said the other objective of PIA privatization was to regain the maximum value and avoid unbearable losses to the national exchequer, which stood at Rs12.70 billion per month.

He said the Privatization Commission had suggested appointing a single-transaction adviser, for which approval would be taken from the federal cabinet on the basis of the report prepared in 2017.

Fawad said efforts were being made to resume the PIA flight operations for Europe as soon as possible, adding that a team of experts was expected to visit Pakistan in December or January for reviewing the flight safety and security standards.

He said Pakistani pilots were highly skilled and capable of landing and taking off in difficult areas.

Similarly, our engineers and supporting staff are also of international standards, he added.

Currently, he said the PIA fleet consisted of 34 aircraft, out of which 15 were grounded including six leased-one and their accumulated losses were recorded at $2 million.

Regarding the privatization of Pakistan Steel Mills (PSM), the minister said the loss of PSM stood at Rs230 billion and it was operating with outdated technology. He said the transaction structure of the PSM was approved in December 2020; however, its privatization process was halted due to interest shown by a single bidder. The minister said the government had not received any government-to-government proposal on the privatization of PSM, adding that currently the PSM had the capacity to produce 1.1 million tons and it could be enhanced up to 3.1 million tons.

About the privatization of PIA’s iconic Roosevelt Hotel in New York, he said the date had been extended beyond November 8, and further action would be taken after receiving the necessary plan of action for further proceeding. Fawad said the highest investment had been made in the power sector in Pakistan and now “we are moving towards the free energy market. We have had two meetings with the International Finance Corporation. We are trying our best to engage with the private sector on a long-term basis and move forward on the public-private partnership model.” He said the process for privatization of House Building Finance Corporation, State Life Insurance Corporation, First Women Bank and other SOEs would also be carried forward in a transparent manner.