Fresh approach required to sell off PIA, says minister Aleem Khan
• Aleem Khan tells Senate panel a new consultant will be hired to move privatisation process forward
• Slams FBR for imposing taxes on new aircraft purchases
ISLAMABAD: Efforts for the privatisation of Pakistan International Airlines (PIACL) would continue and it would require a fresh approach and ‘big-hearted’ decisions, Minister for Privatisation Abdul Aleem Khan told the Senate Standing Committee on Privatisation on Monday.
He revealed that the first consultant engaged for the task was deemed unsatisfactory, and now a new consultant would be hired to help move the privatisation process forward, emphasising that the privatisation could only take place if PIA’s financial and operational situation was “clean” and attractive for potential buyers.
The minister expressed optimism about the prospects of PIA’s privatisation once these issues are resolved.
“We will fix what has been damaged and work with a new consultant to ensure PIA is ready for privatisation,” Mr Khan said.
Chaired by Senator Talal Chaudhry, the committee reviewed ongoing privatisation efforts to address concerns regarding the future of PIA and state-owned power distribution companies (Discos).
Mr Khan highlighted significant hurdles in the privatisation process of PIA and Discos.
Discussing the financial challenges of the national flag carrier and its privatisation process, the minister briefed the committee on the financial woes of PIA, citing a staggering loss of Rs830 billion, of which Rs623 billion had been parked in the Holdco company to manage outstanding liabilities.
He noted that despite efforts to stabilise PIA, it still faces challenges, including a loss of Rs45 billion at the time of the launch of the privatisation process in November last year.
“We have parked PIA’s debt, but the privatisation process must be conducted with transparency and a clear strategy,” Mr Khan remarked.
He compared PIA’s situation to Air India, which the minister claimed had undergone multiple failed privatisation attempts before ultimately succeeding on its fifth attempt.
He expressed the hope that the national flag carrier could follow a similar path, but underscored the need for thorough reforms.
The committee discussed the lack of interest from potential buyers, citing various factors including the high 18 per cent GST on PIA services, which has deterred investors.
The minister also criticised the Federal Board of Revenue (FBR) for imposing taxes on new aircraft purchases, a move which he said was inconsistent with global practices and a barrier to PIA’s recovery.
“We need to ensure that PIA is clean and profitable before privatisation can proceed. Without addressing these fundamental issues, investors will show no interest,” Mr Khan said.
During the meeting, the committee members expressed concern over the slow pace of privatisation and lack of investors’ confidence in both PIA and Discos.
Senator Khalida Ateeb emphasised the importance of improving the operational efficiency of these state-owned enterprises to attract buyers.
“Investors will only be interested in buying if we improve the state of these institutions,” she said.
In addition to PIA, the committee also discussed the privatisation of state-owned electricity Discos.
The minister noted that the privatisation process for the first three Discos was expected to be completed by January 31, 2025.
However, he acknowledged that privatising Discos would be even more challenging than PIA, citing nine key issues that needed to be addressed before moving forward.
The committee heard that the government was planning to hire a financial adviser by the end of November to assist with the Discos privatisation.
The committee decided to summon the FIA to investigate alleged corruption involving Muhammad Tahseen Alvi, chairman of the Board of Directors of Faisalabad Electric Supply Company (Fesco).
The committee will address the matter in its next meeting, with the FIA expected to provide a detailed briefing on the case.
Published in Dawn, November 19th, 2024