Sell-off fiasco fails to dent PIA privatisation plan

LAHORE:

The privatization of Pakistan International Airlines (PIA) remains on the government's agenda, with Privatization Minister Abdul Aleem Khan stating on Sunday that the national flag carrier will be privatized and the process will be conducted more effectively.

Addressing a press conference in Lahore, the minister said that the Khyber-Pakhtunkhwa government indicated it would participate if the other provincial governments—Punjab, Sindh, and Balochistan—acquired the airline.

The government's first serious attempt to privatize PIA fell through on Thursday when the sole bidder offered a final price of Rs10 billion for a 60% stake in the national carrier, significantly below the government-set minimum sale price of Rs85 billion. Before the final bidding, PIA was left with liabilities of approximately Rs202 billion and assets estimated at around Rs163 billion, most valued at book price. However, potential bidders were unwilling to assume tax and contingent liabilities.

The failed privatization attempt could have implications for the government's broader privatization agenda, but Aleem Khan emphasized that speculation, comments, and accusations should be avoided regarding this matter.

"The privatization of PIA will definitely happen, and we will strive to do it in a better way. There are opportunities for further improvements," he stated. "The government can also address the remaining Rs200 billion dues and provide PIA with a clean bill of health."

"We have no objection if the Khyber-Pakhtunkhwa, Punjab, and Sindh governments collectively want to purchase PIA," the minister added. "If PIA were to be privatised on a government-to-government basis, the matter would be considered."

The minister's comments came as the Punjab government decided to launch a new airline named "Punjab Air" with the participation of the private investor. According to a report, the work on the feasibility of the airline had been started.

The report stated that after K-P, the Punjab government had also shown interest in the bidding for PIA, while it was also considering in another choice of launching its own airline.

Khan told the media that the airlines had the potential, as it was the only airline for the 240 million Pakistanis, which could fly them directly to Europe and America. "The PIA could generate revenue if managed properly. The PIA has the best destinations for international routes."

Stressing that professional management was vital to run the national flag carrier in effective manner, he said that the PIA was a national asset and could not be sold at a throwaway price. He said that the privatisation process was transparent and "everything was shown live on television".

The minister explained that PIA privatisation process was initiated by the previous caretaker government – some six months before he became the privatisation minister.

"I had no mandate to change this [privatization] framework. My responsibility was not to fix PIA but to sell it," he said.

"The framework for PIA's privatization was established by the caretaker government. PIA had a total debt of Rs830 billion; of that, approximately Rs600 billion was assigned to a holding company, while Rs200 billion was attributed to PIA itself," he explained.

"There are limitations within the current framework, which includes Rs200 billion in liabilities. However, if a new framework is developed, it may allow for PIA to be privatised with zero liabilities, potentially attracting more buyers," Aleem Khan said.

Answering critics, Khan said that he was not responsible for PIA's present condition, adding that a former privatisation minister was giving him suggestions. "He should have implemented those suggestions during his tenure as the minister," he added.

"Those who contributed to PIA's ruin should reflect on their actions," he said, citing a collective failure across different political tenures. "The nation knows very well that every government contributed in bringing PIA to this pass."

Responding to a question about his absence from the final bidding, the minister said that on that day, he was in Riyadh busy in a meeting with Saudi investment minister. However, he added that before that meeting he had joined the meeting of Privatization Commission Board.

The minister emphasised that besides PIA, the privatisation of nine power distribution companies was in the pipeline. "Now instead of speculating, we all have to come up with solutions. Instead of blaming each other and crying over the past, we have to move forward," he said.

Aleem Khan, who also holds the portfolios of investment and communication, said the number of memoranda of understanding (MoUs) signed with Saudi Arabia for investment in Pakistan had reached 34. "Investors are also coming from Russia and China," he added.

Regarding the National Highway Authority (NHA), Khan said it earned profit of Rs50 billion in one year. "I want to see NHA as an international firm so that it goes outside Pakistan, like China and other countries, to win tenders," he said.

(WITH INPUT FROM APP)