Government to privatise SME Bank, Mari Petroleum, PSM and PIA

--Senate Committee asks government to hold privatisation of PIA till next election --PPP to oppose privatisation of PIA


ISLAMABAD: While the opposition parties like Pakistan Peoples Party (PPP), Pakistan Tehrik-e-Insaf (PTI) and others are concerned about government’s move of privatising Pakistan International Airline (PIA) at a time when it is going to complete term in next four months, the government is showing its commitment to go for the sale of the airline and other organisations like SME Bank, Pakistan Steel Mill (PSM) and Mari Petroleum.

Privatisation Minister Daniyal Aziz, while briefing Senate’s Standing Committee on Privatisation on Tuesday, said that transaction of PIA has been approved from the privatisation board and the commission through the financial advisers is completing evaluation process which will take three to four weeks.

He said that in the first phase the air transport section of the airline is being privatised and through the process, 49 per cent shares of the airline will be sold out after valuation. “The Privatisation Act bonds us to complete the process within two years. As per the act, we have to complete the process of carving out the core functions of PIA for the air transport business by mid-April to make the national flag carrier attractive for privatisation,” said Daniyal.

The move, he said, is aimed at parking over Rs150 billion in legacy loans and non-core assets of PIA in a company and selling the core business to private parties. Pakistan International Airlines Corporation (Conversion) Act, 2016, which had been unanimously passed by parliament 21 months ago, gives these powers to the Privatisation Commission.

But on the other hand, the Senate Standing Committee asked the government to leave the proposed transaction to the next government since it has merely four months to complete its term. Taking a decision on privatisation of PIA in haste would create problems for the next government to implement the decision, the Senate committee headed by Senator Mohsin Aziz advised the government.

Objecting the move of privatisation, member of the committee Senator Saleem Mandviwala of PPP, criticised the government’s plan and said his party would strongly resist the privatisation of PIA at this stage when the ruling party Pakistan Muslim League Nawaz PML(N) government is to complete its term in next four months.

He suggested the government to hold privatisation of PIA as possible buyers of the airline would have no confidence in the decision and it would become a burden on the next government to implement the decision.

However, Daniyal Aziz claimed that the government is bound to implement the privatisation act approved by the Parliament.  The privatisation commission, under the law, is required to complete the process of transportation business and valuation within two years after the law was enacted.

Mandviwalla also showed his surprise that Daniyal was giving complete opposite view of the government as the adviser to the prime minister on aviation has made it clear in the National Assembly session that there was no plan to privatise PIA, whereas the privatisation minister speaks of the privatisation of PIA before the general elections.

The privatisation minister further informed the committee that about 68 sick state-owned entities were swallowing over Rs650 billion annually which could have been spent on the provision of health, education and infrastructure for the socio-economic uplift of the country.

Talking about ongoing work on the privatisation move, the minister also informed the committee that his ministry was currently working on the privatization of SMEs bank, Mari Petroleum in addition to PIA and the Pakistan steel mills.

He said the sale of government’s 18.3 per cent share in Mari Petroleum will be completed by April 2018. About the issues relating to discounts of shares of UBL and HBL, the privatisation minister said a detailed reply will be submitted to the committee at its next meeting. The privatisation board has approved off-loading of the 18.3 per cent shares of Mari Petroleum whereas it has fixed Rs6 billion investment benchmark for the privatisation of SME bank, the committee was informed. Privatisation of every entity was carried out in a transparent manner with all stakeholders on board and the cabinet committee on privatisation supervised all transactions.

The standing committee members were given a comprehensive briefing on the proposed privatisation of the steel mill and the fate of its employees.  Steel mills currently have 11,500 employees with a total of Rs188 billion liabilities.  The transaction model approved by the board of the privatisation commission will be a 30-year lease plan of the plant and the core land of the PSM, the committee was told.

On this issue, the committee members recommended that the federal government should take the Sindh government into confidence regarding the lease agreements so that no controversies emerge later on.

Privatisation secretary Irfan Ali informed the committee that the protection of employees’ rights is on the top of government’s privatisation agenda.  He said that PSM had spent the amount of provident fund and gratuity of its employees and the liabilities have now totaled to Rs15 billion.