Money Matters

Selling PIA

Money Matters
By Zeeshan Haider
Mon, 02, 18

Since his appointment as Privatisation Minister, Daniyal Aziz has seldom spoken on his subject and spent much of his fiery rhetoric in defending the government as well as ousted prime minister Nawaz Sharif.


Since his appointment as Privatisation Minister, Daniyal Aziz has seldom spoken on his subject and spent much of his fiery rhetoric in defending the government as well as ousted prime minister Nawaz Sharif.

Interestingly, he spoke on the task he has been assigned to recently, but it did not go without sparking a new controversy.

In an interview with a foreign news agency, he said the government plans to privatise the Pakistan International Airlines (PIA) before the general elections that are due in the second part of the current year.

He said he plans to take his proposals to the cabinet committee on privatisation very soon as he has completed his homework in this regard.

Under the proposed plan, which was initially conceived by Aziz’s predecessor and the sitting Sindh Governor Muhammad Zubair, the national carrier would be split into two companies and its core business would be sold to a global airline.

The PIA along with other loss-making entities, like Pakistan Steels, is undoubtedly a big drain on the national exchequer as they are inflicting billions of dollars of losses every year and it was one of the top priorities of the Pakistan Muslim League-Nawaz (PML-N) when it came into power in 2013.

The accumulated losses by PIA have reached to the tune of 319 billion rupees while Pakistan Steels is also looking for a hefty amount of three billion rupees to pay salaries to its staff.

Along with 67 other entities, the PIA was also to be privatised under the three-year 6.7 billion bailout package signed with the International Monetary Fund in late 2013.

But despite having comfortable majority in the National Assembly, the government has to shelve its privatisation plans because of stiff opposition from its rival political parties, particularly Pakistan Peoples’ Party (PPP).

Violent protests by PIA employees that resulted in the death of two workers and major disruptions in the carrier’s operations in 2016 forced the government to forgo its plan to sell the carrier. Moreover, to placate the angry workers, the government passed a law from the parliament converting PIA into a limited company, entrusting the government with the management control; thus making it literally impossible to privatise it.

Now the question is, how the government will undo this law through the parliament where the ruling party does not enjoy majority in the upper house and it is next to impossible for it to muster support for any important legislation when the Senate mid-term elections happen.

It seems that Aziz’s optimism to privatise PIA by April might be based on expectations that the ruling party would win majority in the Senate elections scheduled on March 3, 2018, but the recent debacle witnessed by the PML-N in Balochistan has raised serious questions whether it would be able to muster majority in the upper house.

Moreover, there are concerns whether the government would be able to find a serious buyer in view of the current political situation in the country, especially since the general elections are only a few months away.

Investors generally shy away from making any commitments or deals during political upheavals and at a time when the current ruling party is locked in a serious tiff with the state institutions, it is unlikely that a serious buyer will enter into such a major deal.

Moreover, the government needs to tell what efforts it has made so far for the restructuring of the entity before it is put on sale so that it could fetch a good price. It is almost impossible to do this job in a span of few months and that too at the time when the government has focused its full attention on the upcoming Senate and general election.

It is, therefore, advisable for the government to desist from creating a new controversy and leave it to its successor to take a decision on such a major and serious transaction.

The government may have done file work to revive the privatisation process, but it has recently made no attempt to consult stakeholders, including PIA employees and the opposition leader.

The government should have taken workers of the carrier into confidence before making another botched attempt of privatisation.

As expected, the PPP swiftly rejected government’s plans to sell PIA with its Senator Saleem Mandviwala, Chairman of the Senate Standing Committee on Finance, warning that any such attempt would be stringently opposed.

The government’s plan could be challenged by its opponents in the court of law and it might get an adverse ruling.

Such a ruling could deal a big blow to investors’ confidence in Pakistan which has already been shattered because of unnecessary litigations in the past over such issues. The country is reeling from the adverse impact of the court cases on the independent power producers’ issues of the 1990s, privatisation of Pakistan Steels as well as the controversy over the mining license of Reko Diq.

Loss-making entities like PIA and Pakistan Steels do require drastic actions to revitalise them. The losses incurred by PIA as of now are coming close to the total circular debt of the country. Similarly, the financial situation of the Pakistan Steels is also unsustainable.

But any half-cooked or hurried action could cause more harm than benefit. Therefore, the government needs to avoid another blunder. With economy already passing through a very critical phase, any misadventure on serious matters like privatisation could backfire.

Throughout its tenure, the government has been advising its opponents to avoid politicising economic matters. It looks strange that at the far end of its tenure, the government itself is sensitising an important issue having a major impact on the economy.

One may not take the minister’s announcement seriously, as he himself has been served with a notice from the Supreme Court for his strongly-worded statements after Panama verdict, but still it has the potential to generate an unnecessary controversy in the country which could intensify the already polarised situation.

Therefore, it is important for Prime Minister Shahid Khaqan Abbasi, who himself has remained a key member of the economic team of the PML-N government, to clarify the situation and personally address the anxiety caused by this uncalled for announcement.

The writer is a senior journalist based in Islamabad