The Cabinet Committee on Privatization (CCoP) has approved the proposal of initiating restructuring process in Pakistan International Airlines (PIA) as well as exploring all the options for Pakistan Steel Mills (PSM). A meeting of the CCoP presided over by Prime Minister Shahid Khaqan Abbasi discussed issues related to Pakistan International Airlines Corporation Ltd and Pakistan Steel Mills on Friday in the light of detailed briefing by the Minister for Privatization Daniyal Aziz.
The minister gave a detailed presentation on various issues, including the financial challenges faced by the two organizations and possible way forward for addressing those issues on permanent basis. The Prime Minister stated that two state-owned entities have become a financial liability on the government due to mismanagement and neglect of the past and are causing enormous difficulties for the employees as well.
The CCOP after a detailed presentation on PIAC gave go-head to the proposal for initiating restructuring process in the entity with segregation of core and non-core functions of the organization. The meeting discussed in detail various administrative, financial and employees related issues of PSM. A proposal for PSM entering into a ''concession'' agreement with investors, on revenue sharing basis, also came under discussion. The Prime Minister directed that all options should be explored and a comprehensive plan should also be worked out for employees'' related issues.
Sources said that Pakistan Steel Mills has been sustaining losses since 2008-09 and its operations have been shut since mid-2015. Since 2009, the government had extended on five different occasions Rs 59 billion bailout packages to PSM and has been paying monthly salaries of the employees since March 2015. As at end-June 2017, gross liabilities of the PSMC have exceed Rs 206 billion.
Sources added that one of the key features of the transaction structure is to settle PSM liabilities prior to entering into an agreement with the prospective bidder. The financial advisor (FA) also proposed PSM liability settlement plan against the available non-core PSM land. He said that PSM employees have been paid salaries up to September 2017.
The PIAC has been incurring financial losses since 2005, resulting in accumulated losses of Rs 328 billion as on March 31, 2017 and now the national flag carrier is heavily dependent on government financial support.
The Parliament''s joint sitting unanimously adopted the PIA (Conversion) Act, 2016. The law facilitates the conversion of PIAC into a public limited company and segregation of core and non-core business segments within two years after the approval of law. As the validity period expires in April 2018, valuation of assets of PIACL and its subsidiaries air transport business is to be undertaken prior to transfer of any shares to third party. The government can transfer management control of airline business with 49 percent to the third party.
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