By Staff Reporter
ISLAMABAD: The election watchdog has halted the sale of the loss-making national carrier Pakistan International Airlines (PIA), saying the legally restricted caretaker government cannot take such a major policy decision ahead of a general election next week.
The Election Commission of Pakistan (ECP) told the cabinet secretary in a letter on Sunday to stop any further steps towards privatizing PIA, including signing an agreement with a potential buyer, until the commission reviews the matter under a law that restricts the interim administration from making key decisions.
The ECP also asked for all relevant documents related to the privatization plan, which was submitted by the financial adviser on Dec. 27 and proposes to sell a 51 percent stake in PIA along with full management control to a strategic partner, after transferring the airline’s debt and liabilities to a separate entity.
“Kindly refer to your letter No.2/1-2024-PS (CS) dated January 27, 2024, on the above subject. The matter raised in your letter was placed before the Election Commission, which after due examination of the issue, in the light of Section 230 of the Elections Act, 2017, and clause 5(b) of the Privatisation Commission Ordinance 2000, has directed that you be requested to provide all relevant documents prepared for approval of the cabinet, containing comprehensive privatisation programme in relation to privatisation of PIA, to this commission for review,” ECP said in the latter.
The commission’s move is a blow to the caretaker government, which is overseeing the elections and meeting the budgetary targets agreed with the International Monetary Fund under a $3 billion bailout program. Pakistan agreed to overhaul its state-owned enterprises, including PIA, as part of the IMF deal in July last year.
PIA has been bleeding money for years, with liabilities of Rs785 billion and accumulated losses of Rs713 billion as of June last year, according to its annual report. The airline incurred losses of Rs112 billion in 2023.
The privatization of PIA has been a contentious issue in Pakistan, where the airline employs about 14,000 people and is seen as a national symbol. Successive governments faced resistance from labor unions and opposition parties whenever they tried to sell off the airline.
The caretaker government, which took office in August after parliament completed its five-year term, revived the privatization process and hired Ernst & Young as its financial adviser. The government also reached an agreement with a consortium of seven domestic banks that hold PIA’s debt and payables, which amount to 825 billion rupees in negative equity.
The commission’s decision may delay the privatization of PIA beyond the expiry of the current IMF program in March. The incoming government may have to negotiate a new deal with the IMF and seek its approval for the sale of the airline.
Earlier, the commission had also barred the caretakers from restructuring the Federal Board of Revenue (FBR), despite clearance from the cabinet and the Special Investment Facilitation Council.
It had written to the prime minister on Jan. 30 to leave the FBR restructuring to the incoming elected government.
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