INSIGHT
The Pakistan Muslim League-Nawaz (PML-N) government, which is struggling to privatise the mighty Pakistan International Airlines (PIA) by converting it into a public limited company, is hopeful to have everybody on its side when the parliament meets after three weeks to help achieve its difficult objective.
Now that the parliament’s session has been adjourned, there are some indications that the government would eventually succeed in converting the national carrier into a public limited company.
According to one senior Pakistan Muslim League-Nawaz leader some understanding has been achieved with the opposition to get the Pakistan International Airlines bill adopted during the next meeting of the parliament, which will be held after three weeks.
“The opposition especially the Pakistan Peoples Party and the Pakistan Tehreek-e-Insaf know it well that the government can bulldoze the Pakistan International Airlines conversion bill into a public limited company. But the treasury has decided to defer the issue after getting some assurances from the main opposition parties that they would not oppose it,” he said.
“This is some kind of an arrangement or a face-saving gesture for the agitating parties, who now, you will witness, may make some hue and cry or walk out from the house when the parliament adopts the PIA conversion bill in its next meeting,” the PML-N leader said choosing anonymity.
The big question however remains who would benefit the most from the adoption of the Pakistan International Airlines bill. It remains to be seen if the national carrier will be sold to some influential who might run the organisation with the financial support of the Qatar-Dubai based billionaire.
Similar rumours are circulating about the privatisation of the Pakistan Steel Mills, which allegedly would be sold to those who are close to the rulers sitting in Islamabad. It has been further alleged that initial preparations have been made in this regard.
Interestingly, about ninety percent of the parliamentarians do not have any interest in the conversion of Pakistan International Airlines into a public limited company or for that matter in handing it over to a local or foreign buyer. They are only concerned about their petty interests related to their own constituencies and in getting the necessary disbursement of funds on a regular basis.
What the government plans to do with the Pakistan International Airlines, Pakistan Steel Mills or any state owned enterprise is believed to be none of their business. Whether the government obliges the legislators rightly or wrongly, it is expected of the law makers to support any of the controversial bills that are presented in the National Assembly or the senate.
All this while, the government diligently maintains that its only interest is in turning around the national flag carrier. But those in opposition do not buy this. The critics and opponents allege that the entire government effort is focused on selling the national airlines to its favourites. The government is often accused of not appointing an efficient and capable team of experts to deal with the fast deteriorating affairs of the Pakistan International Airlines. Instead of closing its eyes, they allege it needs to sign up a better management at the PIA.
The sad truth is that it is not just the Pakistan Muslim League-Nawaz, over the years, no government took any serious interest to revive the national airline, which once used to be among the top ten airlines of the world.
Aviation policy
The PIA’s predicament began with the flawed aviation policy, which allowed the government to extend liberal grant of rights to the Gulf countries and Turkey over the last 15 years. This exercise crashed PIA’s market share from 57 percent to 25 percent which also included closing of its flights to the United States, Canada, European Union, and Saudi Arabia.
Matters went from bad to worse due to the absence of a profession management. This hurt the state owned enterprise in important areas like marketing, customer services, finance, and the engineering department. While every successive government pledged to improve the enterprise, nothing concrete was done to save the PIA from failing. Each government over the past several decades remained interested in getting its own people appointed in the state owned entity more than fixing the problems. Political appointments and considerations remained more important than saving the PIA from complete disaster.
Since when the Pakistan Muslim League-Nawaz government has been planning the privatisation, nobody presented any ideas as to how the Rs230 billion accumulated losses of the national carrier can be managed. The nation has been told that the new buyer will inject billions of dollars to turn around the sick state owned enterprise, but practically nothing has been seen on the ground. No credible solutions were offered to improve the financial health of the national airline. Lately Pakistan Peoples Party and the Pakistan Tehreek-e-Insaf have been presenting their own formulas; however, most of those ideas appear to be for political point scoring and not for changing the situation of the PIA.
“Unless the government appoints a professional management, there is no hope whatsoever to revive the Pakistan International Airlines,” an insider maintains. According to him, the government’s desperate attempts show that it is hell bent to get rid of the loss making enterprise through its early privatisation.
He regretted the negligent attitude of successive governments, including the incumbent Pakistan Muslim League-Nawaz, have brought the national carrier to the brink of disaster. “Our national airline has been kept in the intensive care unit by design and it all started when the so-called open sky policy was introduced that has over decades pushed the national airline into its grave,” he said. He regretted the granting of generous traffic rights to Qatar and Turkish airlines. These rights proved fatal and should have been avoided at all costs, he added.
There are countless problems in the management and decision making bodies within the organisation. One of the major problems is the absence of a single airline expert amongst the decision makers, who can offer a certain policy framework to the government, and enable it to understand the intricacies of the aviation industry. The matter did not just end here, as the way the Civil Aviation Authority (CCA) was run by every successive government through its aviation division also largely contributed to the present woes of the national airline.
According to the former Deputy Managing Director and Chief Operating Officer of PIA Kurshid Anwar, the airline’s fate was sealed in 1998 when on the pretext of liberalisation, the sacrosanct clause of reciprocity in the Air Services Agreement with some countries was ignored without realising that this would portend disaster for the airline in the coming years. This resulted in a lot more rights for Gulf airlines as 1,500,000 passengers per year were diverted to them bringing down Pakistan International Airlines’ market share on international routes from 55 percent to 27 percent. The estimated market value of this traffic, he said, was Rs50 billion annually.
An urgent matter
The loss making entity is a huge burden on the national exchequer and the present government’s stance to get rid of the losses through some quick privatisation seems to be the best available option. It would be ridiculous to continue pumping billions of rupees into the national carrier without much justification.
The problem however is the general perception that the government is not being transparent in the privatisation process and is allegedly planning to sell the state owned entity to some favourite at a throwaway price. If the government’s objective is to disinvest its core functions to revive the airline before the privatisation, no one would oppose the idea for which the government initially wants to convert it into a public limited company.
Amid confusion
There is a lot of talk about the sale of the Pakistan International Airlines Roosevelt Hotel in New York and another in Paris before the privatisation. The confusion continues to persist whether these hotels are to be sold separately or would be made part of the overall privatisation of the national carrier.
Also, the government invited unwanted criticism when it decided to launch a parallel national airline. This seems illogical when on one hand the government calls for getting rid of the loss making state run corporations, but on the other hand, looks determined to have another airline in the public sector. This completely negates the government’s original plans regarding privatisation. Moreover, it makes people doubtful of government intentions. People get suspicious whether there is someone who would ultimately be benefited.
There is no question that a better would have been to revive the Pakistan International Airlines and Pakistan Steel Mills by bringing in a better and well equipped management to run the day to day affairs of these entities.
However, since that did not happen, the government needs to be completely fair to achieve its target.
On many fronts privatisation is being supported but the demand is to be completely transparent in the whole exercise without any ifs and buts.
In the past, selling off state owned entities and using that fund to reduce the budget deficit did not work. The experience was negative.
The government needs to carefully plan the privatisations with complete transparency so that there is no finger pointing. A consensus needs to be reached that there is no good to think that the loss making entities including Pakistan International Airlines and Steel mills could be revived. All such previous attempts did not bear any fruits, courtesy the corrupted minds of the rulers.
Personal favours
In case of the Pakistan Steel Mills, the allegations are once again similar to what has been alleged about the Pakistan International Airlines. People claim the rulers are interested in obliging someone. One wonders why such a perception exists.
The most important issue are the mills, the accrued losses and liabilities of Rs375 billion which are said to be due to unchecked corruption, over employment, incompetence and the lukewarm attitude of all the present and previous rulers.
Former Pakistan Peoples Party Prime Minister Yousef Raza Gilani had said in the national assembly on August 18, 2009 that the Federal Investigation Agency (FIA) had been asked to investigate corrupt practices in the mills. The Supreme Court of Pakistan had ordered the National Accountability Bureau (NAB) on May 16, 2012 to take up corruption issue in the mills. But nothing happened.
The FIA and NAB are investigating the affairs of the steel mills for the last 20 years. They have not completed their investigations till date. Off record, the officials of these institutes ask how they could do anything without the government’s express permission.
Here too the government seems to be either clueless or deliberately pretending to be so. The current situation is adding rupees two billion liabilities every month. It is common knowledge that the country’s premier and once prestigious industrial concern is on the brink of collapse with a number of its units either closed or at a standstill. Is there someone in the government who is taking any notice of this?
An honest privatisation is the only solution as governments have no business to run the public sector. Experiences over the past 68 years prove that rulers cannot be expected to be prudent and even handed when it comes to dealing with state sector corporations. What happened to the decision of the present government to change the board of directors and bring in new managements?
The writer is a senior journalist based in Islamabad
