ISLAMABAD: The government’s first attempt to privatise Pakistan International Airlines Corporation Ltd (PIAC) cost the national exchequer $4.3 million, the National Assembly Standing Committee on Privatisation was informed on Tuesday.
Secretary Privatisation Jawad Paul informed the committee that $4.3m had been paid to the financial adviser Ernst & Young (E&Y) out of a total fee of $6.8m, representing 63 per cent of the agreed payment. The remaining $2.5m will be paid upon the completion of the transaction.
The secretary also informed the committee that the Privatisation Commission had carried out the valuation of properties to be retained in the PIACL, and updated valuations were reflected in the financial statements for the period ending April 30, 2024. The committee asked the secretary privatisation to provide details of properties handed over to holding companies.
The standing committee meeting chaired by Muhammad Farooq Sattar heard Privatisation Commission officials regarding expenditures incurred on the failed attempt to divest PIACL.
Recently, the government informed the standing committee that it was making another attempt to privatise PIACL after the previous effort in which a sole investor submitted a bid of Rs10 billion, significantly lower than the minimum-set price of Rs85bn.
The lack of interest shown by the buyers during the first round of privatisation was due to multiple reasons, including the 18 per cent general sales tax on the purchase of new aircraft and the national carrier’s liabilities, the committee was informed.
Amendment bill
The committee discussed “The Privatisation Commission (Amendment) Bill 2024 (Government Bill)” and objected to Clause 4, Section 7 (4), stating that the Ministry of Law must clarify whether there is any precedent where the prime minister has been given the authority to make decisions on the privatisation process instead of the cabinet.
The committee once again directed the law ministry to present relevant details in written form at the next meeting. Thereafter, the committee deferred the bill till the next meeting.
The committee was also informed that the Lahore-based Pakistan Engineering Company (PECO) was included in the privatisation programme in August 2024. It was further reported that the company has over 32 employees and no active production line. NIT owns 23 shares, which were bought from the open market. On the other hand, the Ministry of Industries believed that the transactions of these shares were not clear on the stock exchange.
Private sector representatives briefed the committee about various issues and highlighted that PECO is a source of pride for Pakistan, attracting visits from Chinese and Japanese industrialists. In the 1960s, the company also manufactured aircraft parts.
Published in Dawn, February 26th, 2025
