IMF agrees to delay PIA sell-off for six months

Published: February 4, 2016



Pakistan and the International Monetary Fund have reached a staff-level understanding to delay privatisation of Pakistan International Airlines by about six months, allowing the government to review its policy that has drawn the opposition’s wrath.

The understanding was reached during the last round of Pakistan-IMF talks in Dubai, according to officials of the Ministry of Finance and Privatisation. The talks under the 10th review of Pakistan’s economy were the toughest among all rounds held over the last two years, they added.

Day 2: All flights grounded as PIA staff refuse to budge

The IMF staff has agreed to relax the condition of inviting expressions of interest (EoIs) from prospective bidders till May 15, said the officials who attended the talks in Dubai. However, the understanding is subject to approval of the IMF management and Executive Board, they added.

The IMF was extremely critical of the government’s failure to move ahead with privatisation deadlines of PIA, Pakistan Steel Mills (PSM) and Faisalabad Electricity Supply Company (Fesco), the officials revealed. This was despite the fact the Privatisation Commission had done the requisite technical work but transactions, particularly of Fesco, could not be carried out due to lack of political will.

The understanding was reached amid violent demonstrations by PIA employees which resulted in the death of two protesters on Tuesday. Due to the deteriorating law and order situation, the chief of the IMF mission in Pakistan, Harald Finger, cancelled his scheduled visit to Islamabad, the finance ministry confirmed.

No to privatisation: Thousands stranded as PIA workers’ strike continues

Instead of continuing the confrontational strategy, Privatisation Commission Chairman Mohammad Zubair proposed that the prime minister set up a committee and immediately invite PIA union leaders to the negotiating table.

The government had lately engaged the PIA union through Senator Mushahidullah Khan but could not resolve the issue. The finance ministry also wasted over 10 months in building political consensus over the legal changes needed in the PIA Act before privatisation.

In February last year, the Privatisation Commission had come to know that the PIA Act had to be amended to transfer shares to prospective buyers. However, the finance ministry wasted precious time and promulgated a presidential ordinance at the eleventh hour, which was eventually struck down by the Senate.

Under a condition of the $6.2 billion IMF loan programme, Pakistan was bound to invite investors to participate in PIA’s privatisation through media advertisements by December 31, 2015, and sell off the carrier by June this year. The officials said the June 2016 deadline would also be relaxed accordingly.

Pak-IMF talks are moving positively towards a conclusive stage, according to a brief statement released by the finance ministry on Wednesday.

The officials said May 15 would also be the deadline for showing progress on Fesco and PSM. The Ministry of Water and Power is a staunch opponent of the power sector privatisation while the government has offered PSM to the Sindh government.

Govt bans union activity to prevent PIA strike 

The PIA privatisation policy remains ambiguous, as the government gave confusing messages to the political parties and the employees. Finance Minister Ishaq Dar has long been insisting the government was not privatising PIA but only looking for a ‘strategic partner’.

The government’s decision to declare the air service as an essential service also complicated matters, particularly at a time when the employees were already on the roads, said the officials.

Recent briefings by the PIA management to the National Assembly Special Committee on PIA Privatisation revealed that the national flag carrier suffered more because of giving landing rights to other airlines without ensuring a reciprocal treatment and a wrong marketing strategy.

Under its privatisation plan, the government has so far sold shares in five state entities, raising $1.7 billion. The Privatisation Commission has hired financial advisory consortium for due diligence of 16 state owned enterprises, including PIA, DISCOs and PSM. However, political handling of these transactions was making the issues complicated, said the officials.

Published in The Express Tribune, February 4th, 2016.

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Reader Comments (11)

  • Hasan Khan
    Feb 4, 2016 - 9:02AM

    The government has also assured that reforms will be carried out at FBR Recommend

  • Aizi Khan
    Feb 4, 2016 - 10:17AM

    Before Elections: We are the most experienced. We will handle all the matters.
    After Elections: We are experienced but we can not handle Govt. Departments so we have to privatize them immediately. Recommend

  • Sodomite
    Feb 4, 2016 - 10:33AM

    Not 6 months. IMF should take PIA and some other strategic entities off the list completely so that we can get on to fixing them without IMF intervention. And start collecting taxes and put power, gas, water thieves behind bars. For a start all power consumption at homes of politicians, government officers, armed forces and utility staff should be stopped. Everyone should pay their share. Only then can you expect peoples loyalty towards Pakistan. Recommend

  • Malik Bhaijan
    Feb 4, 2016 - 11:12AM

    Media channels got privatized. It generated thousands of new jobs and taxes for the government.
    PTCL got privatized. It generated thousands of new jobs and introduced broadband for pakistanis.
    Mobile Telecommunications got privatized. It generated thousands of new jobs, and now every man in pakistan has a mobile.
    Karachi Electric got privatized. It generated thousands of new jobs, and eliminated load shedding from karachi.
    Air India and the Airports in India are PRIVATE, not state owned. They are prospering day in and day out.
    ……should I keep on going?Recommend

  • Pakistan
    Feb 4, 2016 - 12:08PM

    And I thought we gained independence on 14 August 1947!Recommend

  • Allien
    Feb 4, 2016 - 1:51PM

    Why they don’t sale ITTIFAQ FOUNDRY insteadRecommend

  • Fahad
    Feb 4, 2016 - 2:52PM

    Malik Bhaijan…
    Why on earth people like you cant understand that these privatisations are not for effectiveness or improvement…. Its selling country’s assets to pay off for the loans taken by these snakes. Recommend

  • raider
    Feb 4, 2016 - 3:56PM

    @Malik Bhaijan:
    thanks for your arrangements, also enlist failed privatization, first take those peoples to task who did illegal and overcapacity appointments in PIA then also ask this govt how did they make vows of making PIA as profitable and reputed institution once they were in oppositionRecommend

  • Waqar Majid
    Feb 4, 2016 - 4:05PM

    PIA needs to be privatised as a matter of urgency. The planes are old and dirty, the employees are rude, the food is average and service is terrible in general. It is embarrassing as a British Pakistani who takes my children to Pakistan on this airline to be honest – we requested ear phones on our last visit and were told that they will not be required as the TVs are not working.

    PIA has around 19000 employees with around 700 employees per aircraft, which is a ridiculous stat when you compare it with the likes of Lufthansa (127), Singapore Airlines (140), British Airways (178) and even Air India (221) – this stat in itself is sufficient to prove that PIA is not fit for purpose in its current states.

    British Pakistanis in particular are going to our Motherland using other airlines such as Emirates, Etihad, Turkish Airlines, Gulf Air, Kuwait Airways, etc because they are getting more value for their money. I feel the only people that are using PIA like myself do not want to stop on the way, adding a few hours to the journey when we have family with us and also the fact that the arrival time in Pakistan is also favourable – if it wasn’t for these reasons then I am afraid I would not be using PIA either, which is a shame. Recommend

  • Baby Ka Husband
    Feb 4, 2016 - 7:34PM

    @Waqar Majid:
    You have a choice. If you don’t like the service go to another carrier. But God sake stop complaining of little issues. I fly over 10 times to UK and USA annually and I use PIA always. Its better to support an ailing national asset rather than feed the rapacious Arab airlines. Nationalism my friend. Recommend

  • Kareem baloch
    Feb 7, 2016 - 4:08AM

    Pia is the best airline in the world . Privatization process in Pakistan means to sell its assets . The Nawaz govt is not in concerned to make it better , he is only interest in selling, PIA belongs to people of Pakistan only , and PIA employee are the best die heart worker . Recommend

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