PIA, PSM losses stand at Rs426 billion, Senate committee told

ISLAMABAD: Amid the expression of mistrust by parliamentarians over the ability of the Privatisation Commission to sell silver assets in a transparent manner, the senators were informed by the government that the total accumulated losses of the Pakistan International Airlines (PIA) and the Pakistan Steel Mills (PSM) had peaked to Rs426 billion in recent years.
“Since the stopping of the privatisation deal by former Chief Justice Iftikhar Mohammad Chaudhry in 2006 during the Musharraf regime, the accumulated losses of the PSM stand at Rs200 billion,” Privatisation Commission (PC) Chairman Mohammad Zubair told the senators on Tuesday. In his presentation, he also disclosed that the accumulated losses of PIA stood at Rs226 billion.
The Senate Standing Committee on Finance and Revenue, which held its meeting under the chairmanship of Senator Saleem Mandviwalla here at the Parliament House on Tuesday, hinted at one stage to send the failed privatisation transaction of the Heavy Electrical Complex (HEC) to the National Accountability Bureau (NAB) for an inquiry into the alleged scandal where, according to their allegations, one fake company was registered just one day ahead of the publication of an advertisement for the interested parties to participate in this transaction.
However, since the Senate standing committee seemed to be divided between the treasury and the opposition benches over sending the HEC case to the NAB for an inquiry, finally, on a proposal of Senator Fateh Mohammad Hassni, the chairman constituted a sub-committee headed by Senator Kamil Ali Agha to ascertain its findings in this case.
Senator Mohsin Aziz of the PTI, Senator Kamil Ali Agha of the PML-Q and Saleem Mandviwalla severely criticised the PC over the HEC deal, and Kamil Ali Agha stated that an FIR should be registered in this case.
The PC chairman contested it and wondered on what charges an FIR could be registered as no loss had been caused to the national exchequer. The senators also raised questions over why the cheque was accepted which later on bounced.
The PC chairman defended his decision by arguing that the acceptance of the cheque of Cargil Holdings had strengthened their legal position in the court of law. He said that the HEC finances were choked because the credit line of the Bank of Khyber had exhausted, so they were not in a position to ensure delivery in accordance with their contract obligations.
Senator Mohsin Aziz of the PTI asked during the meeting to open up the minutes of the Council of Common Interests (CCI) in which they approved privatisation of the PSM and PIA.
In the presentation, the PC chairman said that the operating capacity of the PSM had sharply declined, dropping from 76 percent a few years back to just 20 percent in 2014-15. The total accumulated losses of the PSM had gone up to Rs200 billion. He said that there were 4,600 officers working in the mills out of whom 60 percent were either just matriculates or studied up to Class XIII only, so expecting a turnaround in the PSM seemed unfeasible.
Senator Mohsin Aziz said that if the PSM were to be run at the capacity of 77 percent, it would transform itself into a profitable concern.
On the PIA’s privatisation, PC Chairman Mohammad Zubair said that few options were under consideration to privatise the national flag carrier as it was being run in accordance with the 1956 act of Parliament. Total liabilities of PIA stood at Rs295 billion while the accumulated losses went up to Rs226 billion.
He said that the profit-making routes were the Haj and Umra flights, while the loss-rendering routes also included New York and London. The ageing fleet compared with other competing airlines was also a major problem. “PIA is not generating cash,” he said and added that he could not understand “how anyone would be able to inject billions of rupees to modernise PIA keeping in view its existing position?”
At one stage, the PC chief said that PIA was making operating profits for the last quarter because of reduction in the oil prices and improved management but conceded that a complete turnaround was a challenging task.
“If PIA does not upgrade its fleet, then how will it be able to compete with its competitors,” he questioned. The number of employees per aircraft stands at 576 compared to an average strength of 135 in other airlines. There is 4.4 times more staff that raised the cost of operation, he added.
Meanwhile, the Senate standing committee unanimously recommended establishment of a border security force to curb smuggling. Referring to a WB’s report, the committee chairman said smuggling under the Afghan Transit Trade stood at $35 billion during the last nine years.
FBR Chairman Tariq Bajwa told the committee that Afghanistan agreed in principle to collect its taxes at the Karachi Port that would help in reducing smuggling in the guise of smuggling back of certain items into Pakistan.
Bajwa said the FBR seized smuggled goods worth Rs24.4 billion last year against Rs5.3 billion two years back. However, he said that the strength of the Customs force at the long and porous borders was much less and on an average their age was 55 years old. He said that the FBR seized 90,062 litres of Iranian petrol and also confiscated boats in the sea last week.
Senators Fateh Mohammad Hasni and Kamil Ali Agha said that the Iranian oil was being smuggled into Balochistan and other parts of the country in alleged connivance with the PSO, so it should be dealt with an iron hand. Senator Agha said that the Customs officials were standing at entry points of Lahore on the Motorway for harassing commuters, which should be discouraged by the FBR.