FINANCE Minister Muhammad Aurangzeb’s reaffirmation that the process of disinvestment of the loss-making national carrier will be concluded by the end of June or early July reinforces confidence in the government’s commitment to privatisation. Reiterating the old refrain “the government has no business being in business”, Mr Aurangzeb declared that the country’s three main airports — in Islamabad, Lahore and Karachi — are next on the list of privatisation. “We expect the bids for PIA to come in the next two to three weeks, and by the end of June or early July, we can move it to the investors,” he told a news briefing at the end of his weeklong visit to Washington to discuss a new and larger medium-term package with the IMF. It is encouraging to see the minister consistently underscoring the need for privatising state-owned enterprises, which are incurring massive annual losses of Rs500bn, and have become a source of systemic risk for the national budget as well as our creditors. Yet, he, like other government officials, has never elaborated if the authorities have a clear privatisation roadmap beyond the sale of PIA and the outsourcing of airports.
The current initiative on the privatisation of the national carrier and airports is understood to have been taken under the military-backed Special Investment Facilitation Council to hand over these assets to investors from friendly Gulf countries, probably in government-to-government deals. This has generated an impression that the civil and military authorities are in a hurry to disinvest these assets for raising a few billion dollars to ease pressure on the current account and budget. While taxpayers can no longer afford to finance the state-owned resource guzzlers, the hasty pursuit of privatisation, especially PIA, might cast serious doubts over the process even if these transactions are not challenged in the courts. Multilateral lenders like the World Bank have also cautioned against the perils of a chaotic privatisation process, advising the authorities to pursue disinvestment of these assets in a planned and structured manner through a revamped privatisation commission staffed with “able professionals who can prepare a financial model for each entity to be privatised”. Transparency and full disclosure in such transactions is crucial for inspiring public confidence in the process and avoiding complications or legal challenges for investors. This should also help the authorities fetch better prices for these assets.
Published in Dawn, April 23rd, 2024
