Caretaker Minister for Privatisation Fawad Hassan Fawad has said the government will not ground the Pakistan International Airlines (PIA) — its highest loss-making enterprise — and that no employee of any entity would be sacked even after its privatisation.
The statement came hours after interim Finance Minister Dr Shamshad Akhtar said the government would give any support needed to keep the PIA in the skies.
The two separate statements may pacify lobbies working to save the airline despite a severe financial crisis. But the approach suggests that the taxpayers’ money would constantly be used to defend wrong decisions of the PIA management.
“The prime minister has instructed me that the PIA would not be grounded. We have already worked out a way to keep the PIA flying,” said Fawad while responding to a question while addressing a news conference on Thursday.
The Express Tribune reported this week that the PIA had requested a moratorium on its domestic debt repayments to bridge an annual deficit of Rs153 billion between its sales and essential expenditures.
The PIA management and the Ministry of Finance were in discussions for about Rs260 billion domestic debts restructuring that the airline owed to nine commercial banks.
Fawad said he was reviewing a plan shared by the PIA and has yet to reach a decision.
The PIA’s plan revolves around debt restructuring, blocking tax payments of the Federal Board of Revenue (FBR) and not paying fees and charges of the Civil Aviation Authority (CAA) but doing nothing to improve its administrative affairs.
“We will have to give support to the PIA, as the government has 92% stakes in the airline,” said Dr Shamshad Akhtar, while addressing a separate news conference. She said if needed, the government would also restructure the PIA debt but the final decision would be taken by the privatisation minister.
Earlier this week, the prime minister removed Dr Shamshad from the chairpersonship of the Cabinet Committee on Privatisation and the Cabinet Committee on Intergovernmental Commercial Transactions. Both these responsibilities have been given to Fawad Hasan Fawad.
However, this raised the question of conflict of interest and whether the Cabinet Committee on Privatisation still plays an effective oversight role under the new arrangement.
The privatisation minister also serves as the chairman of the Privatisation Board
The board’s recommendations for privatisation go to the Cabinet Committee on Privatisation for final endorsement. The roles of the Privatisation Board chairman and the cabinet committee chairman have now been entrusted to one person.
Fawad's perspective is that the Cabinet Committee is a body for collective decision-making and his position as chairman of the committee would not raise the conflict of interest question.
The information minister’s response to a question about why did the government remove Dr Shamshad from the position of the chairpersonship of the two committees was awaited till filing of the story.
Fawad said the last government decided to privatise the PIA and to give Roosevelt Hotel on lease under a joint venture. He said the interim government’s mandate was to continue work on those transactions.
The minister said that the process to give the PIA-owned Roosevelt hotel on lease under a joint venture arrangement had been initiated much before he became the minister.
Fawad clarified that propaganda is spread regarding the privatization of institutions but the fact is that the caretaker government has not started any privatisation plan.
He said the previous government had amended Section 230 of the Election Act, 2017 and gave mandate to the interim set-up for completing ongoing privatisation transactions.
The PIA was trying to secure commercial loans since June this year but it became possible only after I became the minister for privatisation, said Fawad.
He maintained that the interim government would not include any new entity in the active list of privatisation and would continue work only on those entities that are already in the privatisation list.
Fawad also said the government would not lay off any employee even after the privatisation of the entities where they work. He said the employees would be given various options.
To a question, the minister said the Pakistan Steel Mills should be privatised. But he said out of four pre-qualified companies, three were no more interested in acquiring the PSM.
The prequalification had been done in 2020 and after that ground realities have changed, mainly reduction in demand of the steel, he added. The minister said he was not in favour of single-bidder privatisation of the PSM but the final decision will be taken by the federal cabinet.
Also, the caretaker government has drafted a preliminary policy for state owned entities (SOEs), and listed ten companies for privatisation initiatives or turnaround, said Dr Shamshad in Thursday's press conference.
Under the current $3 billion bailout package from the International Monetary Fund (IMD), that was critical in averting a sovereign debt default, losses in the SOEs, which are burning a hole in the government pocket, will need stronger governance.
As of 2020, the accumulated losses for the SOEs amounted to Rs500 billion, said Akhtar. She said under the policy, the appointment of independent directors will be through a nomination process, adding that no ministry would be able to issue directives to the SOEs in order to improve governance.
Pakistan has been discussing outsourcing operations of several of its state-owned assets to outside companies. In March, it kicked off outsourcing of operations and land assets at three major airports to be run under a public private partnership, a move to generate foreign exchange reserves for its ailing economy.
WITH ADDITIONAL INPUT FORM REUTERS
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