The government has finalized privatization of Pakistan International Airlines (PIA), SME Bank, Pakistan Steel Mill (PSM) and Mari Petroleum Company Limited (MPCL) and is working to complete these transactions in the remaining months of its tenure.
On January 23, 2018, Adviser to the Prime Minister on Aviation Sardar Mehtab Abbasi stated that the privatization of the national flag carrier is not possible before elections. Presenting a report before the Senate on PIA''s performance, Abbasi said that privatization of PIA was not possible during the remaining tenure of the incumbent government as the process requires at least a year to be completed.
Sources in PC told Business Recorder that two smaller transactions - capital market transaction for SME Bank and divestment of government shares in Mari Petroleum Company Limited (MPCL) - are at an advanced stage and likely to be completed before the general elections.
Secretary Privatization Commission, Irfan Ali, while talking to Business Recorder said, the privatization of these entities has nothing to do with how much tenure is remaining as privatization requires due process while ensuring diligence and transparency.
In January 2017, the Cabinet Committee on Privatization (CCoP) approved the privatisation of SME Bank which was incurring losses (net loss after tax) since 2010, resulting in total losses of Rs 2.7 billion.
Ali stated that SME is a small transaction in which 60 percent of the company would be offloaded; though initially the successful bidder would inject Rs 2 billion as per State Bank requirements while the remaining Rs 4 billion is spread over a period of four years.
The process of hiring of financial advisors for the privatization of Mari Petroleum is under process, he added. About PIA privatization, he said liabilities have been estimated at Rs 200-300 billion which will be transferred to non-aviation business, so that the balance sheet of aviation can be cleared. PSM is a giant transaction which has liabilities of over Rs 188 billion, he added.
The CCoP approved divestment of 18.3 percent government shareholding in MPCL either through joint-venture partners (including Fauji Foundation and OGDC) or the domestic stock exchange. Fauji Foundation holds 40 percent of MPCL shares along with management rights, while the Government of Pakistan, Oil and Gas Development Company Limited (OGDCL) and general public hold 18.39 percent, 20 percent and 21.61 percent of shares respectively.
The PC is following the PIA Corporation (Conversion) Act of 2016, approved by parliament in 2016. Under the law the government is required to delineate the non air transport business from the airline business by April 18, 2018, and carry out valuation of the air transport business component. After these two steps are complete, the government intends to sell of 49 percent shares. Senator Saleem Mandviwalla of PPP strongly criticized government''s intent to proceed with its privatization plan during its remaining tenure and stated that his party would oppose PIA privatization.
Prime Minister Shahid Khaqan Abbasi on Friday directed Privatization Commission to go-ahead with the privatization of the two major loss-making state-own entities - PIA and PSM. The CCoP in October 2013 approved a broad based privatization programme of 68 PSEs out of which 42 were earmarked for ''Early Implementation". However, since 2013, five privatization transactions have been completed and include UBL, PPL, ABL, HBL and NPCC netting proceeds of Rs 172.9 billion.