Caretaker Privatization Minister Fawad Hassan Fawad Tuesday said that Pakistan International Airlines’ (PIA) core business would be made available to interested buyers with current obligations and assets after approval by the federal cabinet.
Addressing a news conference along with Minister for Information and Broadcasting Murtaza Solangi, Fawad stated the financial advisor would present a proposal to restructure and later privatize PIA with or without a government sovereign guarantee.
The minister said another objective of the privatization was to regain the maximum value and avoid unbearable losses to the national exchequer, which stood at Rs. 12.70 billion per month. He said the Privatization Commission had suggested appointing a single-transaction adviser, for which approval would be taken from the federal cabinet on the basis of the report prepared in 2017.
Fawad said the privatization of PIA aimed at bolstering the country’s aviation industry and highlighted that the government allocated Rs. 2.542 trillion to support loss-making SOEs between 2018 and 2022.
He highlighted the importance of privatizing loss-making state-owned enterprises (SOEs) to enable them to compete effectively in the evolving global economy.
Regarding the Pakistan Steel Mills (PSM), the minister indicated that the government planned to present the matter to the federal cabinet, which will then make a decision in due course. He assured that the government is taking forward the privatization process in a transparent manner and a robust regulatory control regime would be in place to safeguard public interests throughout the process.
Fawad expressed regret over the past governments’ failure to adequately address the country’s economic challenges. He recalled that privatization efforts commenced in 1994, with some cases still pending in the courts. However, he reaffirmed the caretaker government’s commitment to fulfilling the responsibilities entrusted to it by the elected governments, emphasizing their adherence to the given mandate.
The minister disclosed that in 2020, SOEs contributed to a 7 percent deficit in the Gross Domestic Product (GDP). 15 major SOEs were incurring losses amounting to Rs. 2 trillion, he added. He also highlighted that the government allocated Rs. 2.542 trillion to support loss-making SOEs between 2018 and 2022. He underscored that these funds could have been allocated to advance national development projects such as the Bhasha Dam.
PIA Losses
By the end of June 2023, the accumulated losses of PIA were recorded at Rs. 713 billion out of which Rs. 263 billion comprised of debt, besides an additional amount of Rs. 13 billion was provided by the banks on government guarantee, he said adding the government also provided Rs. 150 billion from its own resources.
Fawad said efforts were being made to resume PIA flight operations for Europe as soon as possible, adding that a team of experts was expected to visit Pakistan in December or January to review the flight safety and security standards.
He said Pakistani pilots were highly skilled and capable of landing and taking off in difficult areas; similarly “our engineers and supporting staff are also of international standards.”
Currently, he said the PIA fleet consisted of 34 aircraft, out of which 15 were grounded including six leased-one, and their accumulated losses were recorded at $2 million.
About the privatization of PIA’s Roosevelt Hotel in New York, he said that the date had been extended beyond November 8, and further action would be taken after receiving the necessary plan of action for further proceeding.
PSM’s Losses
Regarding the privatization of Pakistan Steel Mills (PSM), the minister said that the loss of PSM stood at Rs. 230 billion and it was operating with outdated technology. He said the transaction structure of the PSM was approved in December 2020, however, its privatization process was halted due to receiving interest from a single bidder.
The minister said that the government has not received any government-to-government proposal regarding the privatization of PSM, adding currently the PSM had the capacity to produce 1.1 million tons and it could be enhanced up to 3.1 million tons.
Fawad said the highest investment had been made in the power sector in Pakistan and now “we are moving towards the free energy market. We have had two meetings with the International Finance Corporation, we are trying our best to engage with the private sector on a long-term basis and move forward on the public-private partnership model.”
He said the process of privatization of House Building Finance Corporation, State Life Insurance Corporation, First Women Bank and other SOEs would also be carried forward in a transparent manner.
In the past, the minister said the best results of privatization had come out, citing the example of the telecom sector that had around 197 million subscribers while covering 98 percent of the country’s total population.
Source: Pro Pakistani