Privatization Minister Aleem Khan on Sunday said the government will continue to work toward selling the Pakistan International Airlines (PIA), adding last week’s failed attempt suggests the need for a new framework.
On Thursday, the government failed in its bid to privatize PIA after receiving just one bid of Rs. 10 billion against a reserve price of Rs. 85 billion. Five other pre-qualified parties did not participate in the process, reportedly over liabilities and the government retaining a 40 percent share in flag carrier.
Addressing a press conference, the minister said the existing framework had delinked Rs. 600 billion of PIA’s Rs. 830 billion debt, placing it in a holding company, while the remainder Rs. 200 billion was to be transferred to the private buyer. Following the failed attempt to privatize the PIA last week, he said, the government could consider delinking all the debt and offering a “clean PIA” to any potential buyer. He stressed the previous framework was devised by the caretaker government prior to his assuming office.
To questions over why five of the interested parties had opted against participating in the bidding process, Khan said some of their demands could not be facilitate due to the deal inked between the government and the International Monetary Fund (IMF). Among these, he explained, was a demand for zero general sales tax on the purchase of new aircraft.
The minister also addressed reports suggesting the governments of both Khyber-Pakhtunkhwa and Punjab were interested in assuming control of PIA. He said if the province wished to tale on the airline, they should fulfil the requisite legal requirements. Thus far, he said, only the Khyber-Pakhtunkhwa government had submitted an expression of interest, while the media had reported that Punjab Chief Minister Maryam Nawaz had considered it during private conversations with her father, PMLN President Nawaz Sharif.
“If they [Punjab and KP governments] are interested, the provinces of Sindh and Balochistan may also show their interest,” he said, adding they were welcome to do so and operate PIA in a professional manner. Stressing that professional management was essential to ensure the effective operation of PIA, he said it was up to Prime Minister Shehbaz Sharif to decide whether to sell PIA to a province or restart the privatization process.
To a question over why he had not attended the bidding event last week, Khan claimed he was in Saudi Arabia for a meeting regarding investment in Pakistan. Nonetheless, he maintained, he had attended meetings of the Privatization Commission and the Cabinet Committee on Privatization ahead of the bidding event. He regretted that successive governments had all played a role in “destroying” PIA, adding the airline remained a “national asset” that cannot be sold at “throwaway” prices.
Maintaining the initial bidding process was conducted transparently, he said it was now time to look forward and devise a means to achieve success in the next round.
More privatization plans
According to the minister, the government is also considering the privatization of nine distribution companies. He claimed the country was also attracting foreign investment, particularly from Saudi Arabia, Russia, and China.
Khan, who holds the additional charge of communications minister, claimed the annual revenue of the communications sector would surpass Rs. 500 billion in the next five years. Achieving this, he said, required the National Highways Authority (NHA) to expand operations beyond Pakistan and operate as an international firm. He claimed the NHA would post a Rs. 50 billion profit by the end of this year.