Ahead of the Feb 8 parliamentary elections in Pakistan, the caretaker administration is making plans for the next government to sell the national airline- Pakistan International Airlines (PIA), reported news agency Reuters on Friday (Feb 2), citing people familiar with the matter.
Speaking to Reuters, Privatisation Minister Fawad Hasan Fawad said, “Our job is 98 per cent done. The remaining two per cent is just to bring it on an excel sheet after the cabinet approves it.”
The plan to sell the PIA was drawn up by Ernst & Young (EY). Privatisation Minister Fawad said the plan will be presented to the cabinet for approval before the tenure of the administration ends following the elections.
The cabinet will also decide whether to sell the stake by tender or through a government-to-government deal, he said. The minister further said that what the caretaker administration did in just four months was what past governments had been trying to do for more than a decade.
The privatisation of PIA
Pakistan, which has been going through an economic crisis, agreed in June last year to overhaul loss-making state-owned enterprises under a deal with the International Monetary Fund (IMF) for a $3 billion bailout. Just weeks after signing the IMF agreement, Islamabad decided to privatise the PIA.
As of June 2023, PIA had liabilities of 785 billion Pakistani rupees ($2.81 billion) and accumulated losses of 713 billion rupees. The airline said losses in 2023 were likely to be 112 billion rupees.
Also watch | Toshakhana case: Imran Khan, wife handed over 14-year sentence
Citing two sources, Reuters reported that a 51 per cent stake with full management control would be offered to buyers after parking the airline’s debts in a separate entity. Earlier, a PIA spokesperson said that the national carrier was assisting the privatisation process, extending “full cooperation” to the transaction adviser.
A draft posted on the Pakistan parliament’s website said that besides operational and technical measures for PIA’s divestment, the caretaker administration also amended a 2016 law that had blocked selling off its majority shares.
Criticism of the ‘speedy sale’
The speedy sale of the PIA has been criticised. Speaking to Reuters, three airline officials who chose to remain anonymous, said that fast sale could devalue the airline’s worth and that it would not be a transparent transaction without due diligence.
“We are not against its privatisation, and all we want is that you don’t just throw it away,” one of the officials said.
Apart from losses and debts, PIA’s governance and safety standards have been under scrutiny in recent years. In May 2020, the crash of a PIA plane in Karachi killed nearly 100 people and a fake pilot licence scandal erupted later that year.
This scandal led to the European Union Aviation Safety Agency (EASA) banning the PIA from flying to its most lucrative routes in Europe and the UK. The ban is still in place and the PIA has been pleading with EASA to lift the ban even provisionally.
The national carrier also said that the economic crisis in Pakistan led to seizure of PIA aircraft by creditors in recent months. Reuters also reported that while the PIA is awaiting a decision on the sale, it continues to need financial support to keep it afloat for another five to six months.
(With inputs from agencies)