Senate body insists on halting PIA’s privatisation

This comes as minister says govt is pressing ahead with airline’s sell-off plan

ISLAMABAD: A Senate panel on Tuesday asked the government to halt the privatisation of Pakistan International Airlines (PIA) after Privatisation Minister Daniyal Aziz again insisted that the national flag carrier was still up for grabs, which was contrary to an assurance that the government gave to parliament a week ago.

Aziz’s stance in a meeting of the Senate Standing Committee on Privatisation was different from what Adviser to Prime Minister on Aviation Sardar Mehtab Ahmed Khan Abbasi said in the upper house of parliament.

A week ago, Abbasi emphasised in the Senate that there was no plan to privatise PIA and the management was working hard to restructure the airline and regain its past glory.



“Practically, I have no knowledge that any move is being made to privatise the national airline and do not see any process to privatise PIA as the process may take three to five years,” he said.

The biggest concern of the standing committee was that due to paucity of time, privatisation transactions initiated by the PML-N government could not be completed by June this year and the mess would have to be cleared by the next government.

On January 15, Aziz had announced that the government would carve out core functions of PIA within three months to make the air carrier attractive for privatisation. It was aimed at parking over Rs150 billion in legacy loans and non-core assets in a separate company and selling the core business to private-sector investors.

The government may continue the process of separating the core functions, but PIA should not be privatised, said Senator Mohsin Aziz, Chairman of the Standing Committee on Privatisation.

Pakistan Peoples Party and Muttahida Qaumi Movement senators backed him and the lone PML-N senator, Nehal Hashmi, also did not object to the recommendation.

“Under the Pakistan International Airlines Corporation (Conversion) Act 2016, which had been unanimously passed by parliament, I am legally bound to push forward the PIA privatisation process,” said Daniyal Aziz.

He expressed complete ignorance about the statement given by the PM’s adviser in the upper house of parliament. Mohsin Aziz said the government was making contrasting policies as one minister was making long-term commitments to restructure the airline while the other wanted to privatise it in four months. Under the Act, the process of separating PIA’s core and non-core functions has to be completed within two years of the enactment of the law and the deadline is going to end in April this year.

PIA was on the active list of privatisation that Pakistan agreed under the three-year International Monetary Fund loan programme, but the government backed off after opposition parties refused to support the move.

PSM revival

The privatisation minister claimed that the government was close to achieving a breakthrough in its negotiations with National Bank of Pakistan (NBP) and Sui Southern Gas Company (SSGC) on the repayment of loans and arrears by Pakistan Steel Mills (PSM).

Against SSGC’s claims of Rs44 billion, the steel mill put the outstanding bill at Rs31 billion including the late payment surcharge. According to the minister, SSGC has informally agreed to accepting around Rs31 billion. SSGC has not been supplying gas to PSM for the past two and a half years, resulting in closure of the country’s largest industrial unit.



The minister said NBP was also ready to significantly reduce its claim of Rs53 billion. If these issues were resolved, the Privatisation Commission would invite Expressions of Interest for giving the mill on 30-year lease, he added.

He insisted that the government would also settle Rs15 billion worth of liabilities of over 3,500 PSM employees, who would retire in the next five months.

Power sector privatisation

He acknowledged that the privatisation of power distribution companies had been affected by the determination of low multi-year tariffs by the National Electric Power Regulatory Authority.

At these tariffs, the distribution companies could not survive and there was a need to revive the high recovery and low line loss benchmarks. 

Published in The Express Tribune, January 31^st, 2018.

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