In a major policy shift, the Privatisation Commission (PC) board on Thursday decided to reinitiate the process of privatising Pakistan International Airlines (PIA) and all power generation and distribution companies.
The PC board also approved a Rs141.4-billion liabilities settlement plan of Pakistan Steel Mills (PSM) employees, National Bank of Pakistan and Sui Southern Gas Company (SSGC) by giving away PSM land.
It decided to invite fresh bids for hiring financial advisers to sell government shares in Mari Petroleum Limited.
The decisions, if endorsed by the Cabinet Committee on Privatisation (CCOP), will revive the privatisation programme that had lost steam in mid-2015 when the then prime minister Nawaz Sharif stopped the strategic sale of these entities following pressure from political circles and labour unions.
The decisions of the PC board, which met under the chairmanship of Privatisation Minister Daniyal Aziz, were in line with the thinking of Prime Minister Shahid Khaqan Abbasi.
If the CCOP endorses the newly agreed privatisation programme, it may help in negotiations with the International Monetary Fund for a new bailout package, sources said.
The privatisation of PIA and power companies is the unfinished agenda of the previous IMF bailout of $6.2 billion.
The PC board decided to stop the listing of the Gujranwala Electric Power Company at the Pakistan Stock Exchange. Instead, all power generation and distribution companies may be privatised by handing over their management control to the private sector.
In the first phase, Northern Power Generation Company Limited, Faisalabad Electricity Supply Company and Islamabad Electricity Supply Company may be privatised.
In October 2013, the PML-N government had decided to privatise the power companies and hired financial advisers to complete technical studies. But in November 2015, it halted the process and started work on divesting shares in power distribution companies at the stock market.
Its purpose was to improve corporate governance and strengthen accountability, but the situation further deteriorated in these entities, said Aziz while talking to The Express Tribune.
The minister said the PC board recommended that the government should again start the strategic sale of these entities. Aziz said even the International Finance Corporation, an arm of the World Bank, had suggested that share divestment was a sub-optimal option for Pakistan.
The minister said the CCOP would soon meet under the chairmanship of prime minister to consider the PC board’s decisions.
The board decided to sell majority stake in PIA to private parties, requesting the government to amend the PIA law that barred transfer of ownership to private hands.
A joint session of parliament had passed the PIAC Conversion Act 2016 whereby the entity was converted into a public limited company.
Under pressure from the PPP, the government inserted sub-section 4 into Section 4 of the PIAC Act that restricts the federal government from transferring management of the airline and binds it to retain 51% shares in PIA.
The privatisation minister said the PC board recommended that this section must be amended to pave the way for PIA privatisation. Despite making efforts, PIA’s affairs had not improved and the management had started closing its routes, he said. On Wednesday, the ECC approved a Rs13.6-billion bailout package for PIA.
The minister said the PC board also recommended the settlement of PSM’s outstanding liabilities. He said the federal government would not sell the provincial government land and only the PSM land would be sold.
In January this year, the PC board had decided to give PSM on a 30-year lease but that required the settlement of all outstanding liabilities. The transaction manager has finalised the settlement plan. PSM has 19,013 acres of land.
PSM needs Rs47.8 billion to settle liabilities of the employees on account of pension and gratuity. SSGC’s outstanding gas bills are estimated at Rs41 billion and NBP loans stood at Rs52.6 billion.
In addition to that, the federal government has also given Rs42.6-billion financing to PSM.
In August 2015, the PC board recommended to sell 75% stake in PSM. But the CCOP decided to offer the entity to the Sindh government. The Privatisation Commission claimed that Sindh did not respond to the offer.
The federal cabinet has now decided that any party can acquire, including the Sindh government, PSM through competitive process, said the privatisation minister.