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PIA privatisation: Govt to miss December deadline, says Zubair

05 February, 2014

ISLAMABAD: The two immediate goals of ensuring Rs150 billion in privatisation proceeds by June this year to meet the budget deficit target and sell Pakistan International Airlines by the end of the year are unlikely to be met, said Mohammad Zubair, Chairman of Privatisation Commission, on Tuesday.

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ISLAMABAD: The two immediate goals of ensuring Rs150 billion in privatisation proceeds by June this year to meet the budget deficit target and sell Pakistan International Airlines by the end of the year are unlikely to be met, said Mohammad Zubair, Chairman of Privatisation Commission, on Tuesday.

The deadline agreed with the International Monetary Fund (IMF) for privatising PIA could be changed, depending on prevailing circumstances and market dynamics, said Zubair while interacting with the journalists. photo Accordingto_zps116bf8a4.jpg

He was responding to a question whether the Privatisation Commission (PC) could achieve the December 2014 deadline set by the IMF.

Under the $6.7 billion IMF programme, the fund has asked Pakistan to appoint a financial adviser by the end of March and sell 26% shares of PIA to a strategic investor by end-December.

The PC board approved the hiring of a financial adviser last month. But the PC could not advertise for the expressions of interestsfor hiring the adviser as the All Pakistan Newspapers Society has blacklisted the federal government due to non-payment of dues.

"The government is committed to the IMF and the privatisation programme," said Zubair, who vowed to convince the IMF to extend the December 2014 deadline, if needed.

He said PIA would not be sold on "as is basis" and the entity would be first restructured. The government is going to set up a subsidiary of PIA and its core business will be transferred to the subsidiary that will eventually be privatised.

He said the rest of the services of PIA would be shifted to PIA Holdings which the government would gradually privatise.

The PC was lacking the institutional capacity to undertake the huge privatisation programme but the targets were set which it would try to achieve, admitted Zubair. He said the institutional build-up and the privatisation programme would go side by side.

The government was advancing the most ambitious privatisation programme in the history of the country and in spite of stiff opposition it would push ahead, he added. Zubair, however, sought support of all political parties and the employee unions to keep the process on track.

He said in the next board meeting, the government would take up Faisalabad Electric Supply Company, Hyderabad Electric Supply Company and Muzaffargarh Thermal Power Station for appointment of financial advisers for privatisation.

He said if the process was transparent the question who was the buyer became irrelevant. He said there should be checks and balances but these controls should not hamper the privatisation process.

Zubair said the prime minister had asked him to ensure responsibility and given him the authority to bang the phone of any party leader who tried to influence the privatisation process.

Zubair disclosed that the Ministry of Finance had asked to generate Rs150 billion from the privatisation process before the end of the current fiscal year in June to achieve the budget deficit target.

"The PC is committed to achieving the target provided all goes well but it seems all is not going well," he added.

For the current fiscal year, the government has set the budget deficit target at 5.8% of gross domestic product or Rs1.48 trillion. If the government fails to achieve this target either the IMF programme will be derailed or it will have to seek waiver from the IMF Executive Board, according to analysts.

Privatisation Secretary Amjad Ali Khan said according to internal assessments, the government can earn $850 million (Rs90 billion) by offloading 10% shares of Oil and Gas Development Company. By selling the remaining government shares in Habib Bank, $925 million (Rs98 billion) could be fetched, he added.

Similarly, Rs9.4 billion could be bagged by divesting 10% shares of Allied Bank Limtied and Rs34 billion by selling 20% shares of United Bank Limited, said Khan.

End.


 
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