Govt aiming to sell PIA before 2018 elections, says privatisation minister

Daniyal Aziz says he would take the proposals to the Cabinet committee next week


Reuters January 14, 2018
Daniyal Aziz says he would take the proposals to the Cabinet committee next week. PHOTO: EXPRESS

ISLAMABAD: The government will try to privatise Pakistan International Airlines (PIA) before general elections due this year, privatisation minister Daniyal Aziz said, as the ruling party seeks to restart sales of state-run businesses.

The national flag carrier, haemorrhaging money and losing market share to Gulf-based rivals such as Etihad and Emirates, has been hit by management turmoil in recent years and a 2016 plane crash that led to 47 deaths.

The privatisation of loss-making entities that were draining the exchequer was a key priority for the Pakistan Muslim League-Nawaz (PML-N) party when it swept to power in 2013.

PIA was among 68 state-owned companies earmaked for privatisation in return for a $6.7 billion International Monetary Fund package that helped Pakistan to stave off a default in 2013.

Despite some initial success, the process stalled in 2016 after staff protests caused havoc with PIA operations and the government passed a law that effectively made it impossible to privatise the airline.

‘Emirates, Etihad Airways showed interest in buying PIA stake’

But Aziz, chairman of the Privatisation Commission, told Reuters that new plans have been drawn up to sell off PIA and he would take the proposals to the cabinet committee on privatisation, chaired by Prime Minister Shahid Khaqan Abbasi.

“Next step would be going to the cabinet committee ... and that’s imminent, maybe even next week,” Aziz said in his Islamabad office this week.

The new plans focus on splitting up the carrier, with the core airline business being separated from vast peripheral operations such as catering, hotels and maintenance, Aziz said. The core airline would then be sold.

Heavy losses

But to complete the transaction, Aziz said, the government would have to pass laws in parliament to reverse the 2016 legislation that converted PIA into a limited company and effectively barred the government from giving up management control.

The impetus to sell PIA has grown as the airline has piled up huge losses estimated by its former CEO in March at about $30 million a month. Total debt stood at 186 billion rupees ($1.8 billion) at the end of 2016.

PIA bans use of social media for its employees

When asked how soon could a buyer could acquire PIA, Aziz said: “Tomorrow morning. If you have the money, come and buy it.”

Aziz gave no indication of an expected valuation.

Earlier, The Express Tribune reported that Emirates and Etihad Airways had shown interest in buying a stake in PIA, but the government was forced to retreat from its sell-off agenda as protests kicked off, said a top official privy to privatisation developments.

Analysts have been sceptical about the government’s ability, or willingness, to take on powerful unions and embark on a privatisation process so close to general elections likely in July or August.

Aziz said that, owing to time restraints ahead of the elections, the privatisation commission will focus on one state company per sector, including a bank and an energy company.

He added that there has been “huge interest” in buying Pakistan Steel Mills, once the pride of Pakistan’s industrial output but now shut and bleeding cash.

“We will get runs on the board, but the real challenge is to bring to fruition the two big animals: one is PIA and the other one is Steel Mills,” Aziz said.

COMMENTS (4)

cautious | 6 years ago | Reply Govt has been talking about selling PIA for 2+ years with no success. It's a chronic loser with terrible reputation among customers and the industry. It has union issues, overstaffed, undermanaged and virtually all of the serviceable aircraft are under high cost leases. Even the airline terminals are in terrible condition. It just doesn't bring enough to the table to warrant buying. . Any potential purchaser could likely step into PIA's shoes by simply buying the routes. Buyer would have it's own aircraft and can buy/lease new ones rather than assume the high cost PIA leases. They also have their own management/supervisors and would likely be reluctant accept a unionized workforce. . With elections coming up it's unlikely the govt is going to do anything which would result in massive layoffs at PIA --- and layoffs is exactly what's going to happen if the govt gets serious about selling.
Sodomite | 6 years ago | Reply PMLN is nibbling away bits and pieces, why not put Pakistan on the auction block?? Let's be done with it. The Mogul's sold India out, why not their inheritors do the same?? Pakistanis have proved that they can't manage anything, not even supply of potable water in Karachi. Bangladesh Biman is going places, why not hire a few of their professionals to turn PIA around.
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