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The government is all set to muscle the bill converting national airlines into a public limited company through parliament this week.
The government has convened the joint sitting of the two-chambered parliament after its two attempts to push the controversial bill through the Senate failed because of opposition’s numerical strength in the upper house.
The bill has already been passed by the National Assembly where government enjoys comfortable majority.
Though the government can easily get the bill passed in the joint sitting on the basis of its majority, it seems it still wants a smooth sailing for the bill by convincing the opposition benches about the soundness of its strategy.
That’s why the government has decided not to move the bill on the first day of the joint sitting on Monday, and the Speaker of the National Assembly Ayaz Sadiq has called a meeting of the parliamentary leaders of the political parties in his chamber to draw up the strategy before the start of the proceedings.
“It will be a very critical and important briefing in which we will tell for the umpteenth time about the performance of the Pakistan International Airline (PIA),” Muhammad Zubair, Minister of State for Privatisation told the Money Matters.
Soon after coming into power in mid-2013, the Pakistan Muslim League-Nawaz (PML-N) government had given firm commitment to the International Monetary Fund that it would push through the privatisation process as part of the pre-conditions for the $6.7 billion bailout package to avert the balance of payment crisis. This commitment included the sale of the national airliner which along with other sick public enterprises drain about five million dollars annually from the national exchequer.
Mindful of the political sensitivity of the transaction, the government initially tried to play safe and cautiously in selling out the PIA.
It denied that its plans to sell 26 percent of the strategic shares of the airliner along with the management control in any way constitutes full scale privatisation of national carrier, though experts strongly disputed the government’s assertion.
However, the fizzling out of the PIA employees’ strike against the proposed sale of the airliner and failure of the opposition parties, particularly Imran Khan’s Tehreek-e-Insaf, to organise big protests has emboldened the government to press ahead with its plans more aggressively.
Finance Minister Ishaq Dar last week chaired a meeting to look into the financial position of the airliner which concluded that the PIA could not run its operations without uninterrupted financial support from the government.
Many analysts and experts, however, believe that no serious effort has been undertaken for the revival of the national airliner by the successive governments, including the present one.
They maintain that even if the airliner was to be put on a block there is a need to bring in some improvement in its existing position so it can fetch a reasonable price.
The government, however, has concluded that there is no other option but to privatise the national airliner.
The Economic Coordination Committee of the cabinet last week approved 22 billion rupees bailout package for the airliner that included 5 billion rupees in fresh government guarantees for more borrowing and a roll-over of 17 billion rupees debt previously incurred by the airliner. Previously, the government guarantees for the airliner stood at 146 billion rupees which has now been increased to 151 billion rupees.
“The PIA could not run on its own even for a month,” Zubair said. He said he was afraid that the government had to approve another bailout package after two months for the airliner because of its poor financial position.
Insiders say the government rejected PIA demand for a hefty bailout package to the tune of over 300 billion and instead agreed to keep it on “life support programme” until it is sold to a buyer.
Zubair said the PIA liabilities stand at around 328 billion rupees at present and even the new buyer would refuse to fulfil these liabilities.
“If we decided to sell the strategic shares we have to pay these liabilities for one time but we do not want to turn it into another circular debt by pay it off now and then again after sometime if we don’t sell its strategic stakes.”
The approval of the financial package coincided with the calling of the joint sitting of the parliament primarily aimed at getting the PIA bill passed.
All these measures show that the government is determined to go ahead with its plans to privatise the airliner as it says that those opposing it have no alternate options.
The opposition parties, however, vow to oppose the government’s move though they have yet to foster a joint strategy to counter the treasury benches’ plans.
The PTI leaders say they would resist any move by the government to push through the bill on the strength of its majority.
“We will protest if they tried to bulldoze it,” PTI leader and MP Arif Alvi says. He said he would be attending the meeting called by the Speaker on Monday to listen to what the government side has to say on the issue.
“We have asked the government to explain their strategy to us. They should get out of the ‘yes and no’ proposition on the issue,” he added.
He said his party wanted to know what steps the government has taken for the revival of PIA.
He accused both PML-N and Pakistan Peoples Party (PPP) of adopting a “non-serious” attitude towards the vital national issues.
“Both of them are in the habit of gobbling the flesh of the national assets and then selling their hides when they become sick and useless.”
PPP Senator Saeed Ghani says his party would try to evolve a consensus among the opposition ranks before going into the joint session. “We believe that the PIA can still be revived without being sold,” he added.
He said his party would like the government to let it present a counter-proposal to the government plans to sell 26 percent strategic shares of the national airliner.
“We have firmed up the proposal and want to present it to the government’s privatisation czars.”
However, he said, the government seems to have made up its mind to sell the PIA as it has already made commitments to the foreign donors like IMF.
“We will oppose the privatisation move and if they forced it than we would also oppose it with the same force,” he added.
The government has also given a cold shoulder to the PPP proposal to refer the PIA matter to the Council of Common Interest before bringing it into the joint sitting.
Zubair said the opposition proposal for bringing about improvement in the performance of PIA to grab its market share before privatisation is “easier said than done”.
He said a turnaround is not possible in PIA or any other sick entity just by appointing competent and professional people at the top order.
“How can you bring about a change if your lower cadre is not working,” he asked. “A turnaround is not possible unless every player plays his due role.”
He said PIA’s poor performance is not only restricted to the present government but the airliner has been faring poorly for more than three decades. “It has been a loss-making entity for the last 35 years during the two governments of PPP, two governments of PML-N and also in Musharraf’s government.”
Though privatisation of public entities has been a sensitive issue in many countries continuous political polarisation also make investors scary of putting their money into such transactions, as it may lead to litigations and protests which hurt the interests of the investors.
Therefore, both government and opposition need to handle the issue cool headedly, in keeping with the national interests.
Zubair said the government is mindful of the challenges it could face in finding a credible strategic partner particularly against the backdrop of the employee’s opposition to the privatisation. The opposition postponed the sale for six months and the strike and violence that erupted during the protests by the PIA employees resulted in the death of two people.
“The passage of the bill does not mean that we will handover keys to a buyer,” he added.
“In normal circumstances, you have to burn the midnight oil to find a good buyer to sell your commodity in this era of high competition,” he said, adding that finding a credible and sound investor for a sick entity like PIA is a major challenge. “But we have to at least make a sincere effort.”
He cautioned that unending polarisation “does not only undermine my ability to find a prospective buyer but it also undermines the price of that entity.”
The opposition and critics, however, maintain that the government’s eagerness to privatise PIA is driven mainly by its commitment to the international lenders.
The writer is a senior journalist based in Islamabad
