The govt claims PIA will be privatised by June. Here is how it could play out. 

Against all belief, the past six months have seen incredible progress in the privatisation of Pakistan’s national carrier. So what can we expect in the days to come? 

It seems the only thing Pakistan International Airlines (PIA) has been good for in recent times is being used as a bad example. For years now PIA has been a symbol of everything that is wrong with State Owned Enterprises (SOEs) in Pakistan and how they are run. 

That is why it has constantly been on the docket to be privatised. Yet somehow the national airline is always in the news for reasons why the privatisation is failing. Be it the billions of rupees in losses that the company has made over the last decade, disputes over stranded vehicles costing millions of dollars, or the mismanagement of prime property in central New York — it is always crisis after crisis at PIA. 

Which is why when Finance Minister Muhammad Aurangzeb made a statement during a media talking in Washington indicating that Pakistan is expected to sell its flag carrier before the end of the fiscal year, it was not big news. After all, talk of PIA being privatised has been consistent and nothing new. Except this time it might be for real. So what is going on with the privatisation plans? 

Finance Minister gives a timeline

Mr Aurangzeb stated that bids for the airline are expected to come in the upcoming weeks. It was earlier reported that final bidding was scheduled for the 3rd of June 2024. Aurangzeb also mentioned that after this, “the Islamabad airport is next, followed by Karachi and Lahore.”

While he did not provide much details about how much of the airline, the government of Pakistan is willing to let go, previous reports suggest that the government is interested in retaining a sizable share in the airline, even after selling majority stock and managerial control, much like it did with PTCL, back in the day.

But how did we come to the sale of PIA, so quickly, within the span of one month. Let’s recap:

Plans in motions

As the Shehbaz Sharif-led coalition government took the reins of the nation’s economic course, the fate of PIA hung in the balance, with stakeholders eagerly awaiting the unfolding saga of reform and revitalization. The company’s fate had been in a limbo for at least the last one year. During the long stay of the caretaker government in the country during 2023, the company had been on and off the privatisation list.

The privatisation commission under Fawad Hassan Fawad sought ways to revive the airline. However, after touching grass with the company’s long list of losses and inefficiencies, the company’s privatisation became a top most priority. A consortium of financial advisors led by Ernst and Young was hired to calculate the fair value of PIACL, along with addressing other items on PIA’s privatisation agenda.

A few hiccups were faced when restructuring the massive Rs 281 billion debt of PIA, however, the then finance minister fought hard with the commercial banks to bring down the interest rates.

 

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Shahnawaz Ali
Shahnawaz Ali
The author is a Business and Finance journalist at Profit and can be reached via email at [email protected] and via twitter @shahnawaz_ali1

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