ISLAMABAD: With its liabilities atop Rs325 billion, the government has decided to complete by April the process of separating non-core assets from air transport business of Pakistan International Airlines (PIA) for its ultimate divestment by June, said Federal Minister for Privatisation Daniyal Aziz on Monday.
Speaking at a news conference, the minister played down the Pakistan Peoples Party call to oppose PIA privatisation, saying nothing would come in the way of turning the loss-making entity profitable.
Mr Aziz said all political parties in the parliament had jointly passed the PIA Act on April 15, 2016 to turn the corporation into a public limited company. That law required the government to take certain steps including transfer of non-core assets from PIA’s air-transport business to a separate entity during a validity period.
Under Section 4 of the PIA Act, the government was required to issue orders for the transfer of specified assets to a relevant entity, he said, adding that the orders would be binding on all.
Non-core assets of PIA to be separated from air transport business by April, says privatisation minister
Responding to a question, he said it was not a substantive part of the law but included as an explanation that management control of the PIA or any of its subsidiary companies shall continue to vest in the majority shareholder i.e. the federal government whose shares shall not be less than 51pc.
Valuation of assets
The minister said Section 5 of the PIA Act also required that the federal government shall carry out or cause to be carried out valuation of the assets of the company and its subsidiary companies carrying on air-transport business by a recognised valuator before transferring shares of the companies to a third party.
Therefore, he said, the government was taking steps for the transfer of assets such as Mumbai and Delhi flats, farms in Amsterdam, chicken hatcheries, some business in New York other than Roosevelt Hotel and so on.
Mr Aziz said the government had been wasting around Rs600 billion a year in loss-making entities which could have been spent on the public good including health and education facilities. A very substantive contribution to this financial bleeding came from PIA, he added.
He said that PIA had been put on the privatisation agenda after its approval by the Council of Common Interests (CCI) and the federal cabinet. He explained that the Privatisation Commission was going to implement those orders and the PIA Act in earnest to protect air transport business and associated assets like flight kitchen, hotels and ground handling etc.
The minister said the government would have protected the jobs of the employees but in the given situation the government could not pay salaries out of budget forever as it had been doing in the case of Pakistan Steel Mills (PSM).
The minister said the government was trying to ensure maximum capitalisation of assets and liabilities of the PIA and PSM, because such huge entities were taking down other public sector entities along with them. He said the PSM liabilities to Sui Southern Gas Company Limited and banks were such that if PSM dues were not paid the SSGC could turn into an entity with negative equity.
He claimed that the divestment of the entities would lead to the next stage of international investments and set the stage of creation of job opportunities instead of relying on imported products.
Responding to a question, the minister said that accounting liabilities of PIA and PSM stood at Rs325 billion and Rs200 billion, respectively, as of March 30, 2014 and were being updated.
He said the financial advisers appointed by the government for the privatisation of government entities had developed institutional memory but had expired terms. Therefore, he said, the government was currently reviewing the cases to ascertain if they should be continued to avoid further loss of time.
“We are reviving the process where it had been left,” he said when asked how the government that shelved the privatisation agenda in the middle of its tenure due to political resistance would move forward.
He said the process of valuation of assets of PIA would be completed by April and its divestment completed before June.
Published in Dawn, January 16th, 2018