Privatisation of PIA by Oct 1

ISLAMABAD: The government has decided not to extend the privatisation of Pakistan International Airlines (PIA) beyond October 1, Secretary Privatization Commission Usman Akhtar Bajwa assured a parliamentary panel on Thursday.

While briefing the Senate Standing Committee on Privatization, Bajwa emphasized that Prime Minister Shehbaz Sharif had also instructed that the privatisation process be completed before the stipulated date, without further extensions. This assurance came in response to concerns raised by the committee members.

Earlier this week, the National Assembly’s Standing Committee on Privatization had disclosed that the privatisation process was extended to October 1.

Senator Muhammad Tallal Badar, the committee chairman, highlighted the significance of PIA transaction for Pakistan’s economic future and the broader privatisation agenda. He commended the Privatization Commission’s efforts and expressed optimism that the PIA transaction would be completed within the next two months, paving way for increased competition in the aviation sector.

Badar criticised the prioritisation of political interests over national interests, warning that such practices could impede Pakistan’s progress. He noted that the collapse of entities like PIA or Pakistan Steel Mills would jeopardize both employee welfare and national interests. Despite current challenges, Badar expressed confidence in PIA’s potential, reflecting on its past operational success.

Secretary Bajwa stressed the need for broad stakeholder support to ensure successful privatisation. He outlined the financial burdens faced by PIA, which has accumulated liabilities of Rs499 billion since 2015, with Rs75 billion loss in 2023 alone. Total liabilities have now reached Rs825 billion, while assets stand at Rs161 billion.

He said that six parties were pre-qualified on June 3, 2024, including Fly Jinnah Limited, Air Blue Limited, Arif Habib Corporation Limited, and three consortia led by Y B Holdings (Private) Limited, Pak Ethanol, and Blue World City.

Discussing other privatisation efforts, Bajwa detailed the expenses and proceeds from privatisation over the past five years, totaling Rs4.389 billion in proceeds. While including operational costs, total expenditures amounted to Rs1.99 billion.

He addressed concerns over stalled transactions, including the National Power Parks Management Company Limited (NPPMCL), which was not privatised due to government decisions. The company operates two power plants, the 1,230MW Haveli Bahadur Shah plant in Jhang and 1,223MW Balloki plant in Kasur.

Privatisation of Pakistan Steel Mills was halted due to bidder withdrawal, and the sale of Jinnah Convention Center faced delays due to due diligence issues and concerns raised by the Capital Development Authority.

The committee noted that financial advisers (FAs) have been paid millions of rupees despite no actual privatisations taking place.

The secretary revealed that the FA hired for NPPMCL was paid Rs330 million. Similarly, to FA for Pakistan Steel Mills was paid Rs127 million over three years and to the FA of Jinnah Convention Centre, Rs7 million was paid. This stagnation persists despite the substantial public funds spent on hiring financial advisers, experts and other arrangements.

The committee chairman recommended that privatisation officials present a detailed report on the expenditure involved in privatising distribution companies (Discos) and a financial analysis at the next meeting. He called for a strategic review by the Power Division and outlined the need for a targeted approach to future privatization efforts.