PIA-PSM sell-off plan

Imran Khan, Chairman Pakistan Tehreek-e-Insaf (PTI) while addressing Pakistan International Airlines (PIA) employees at Quaid-e-Azam International Airport in Karachi recently categorically stated that the federal government does not have the mandate to privatise the national airline. Earlier, the PPP too voiced its firm opposition to such a move and the Sindh Assembly passed a resolution opposing sell-off plans of PIA and PSM. Business Recorder fully supports the PTI and PPP contention that with three months remaining for the incumbent administration's tenure to end, there is simply not enough time to privatise such a large organisation which, as per government ministers, envisages first splitting the core from the non-core business and selling-off the latter. Additionally, there has been considerable opposition to the privatisation by PIA employees, which sources maintain, is the reason why the PML-N government abandoned its privatisation earlier in its current tenure. However, to argue that an elected government does not have the mandate to sell state-owned entities is simply not plausible. Thatcherism to many is synonymous with privatisation of government-controlled utilities and was undertaken at a time when the Conservatives had 53 percent of the seats in parliament (1979 elections) which increased to 61.1 percent in 1983 and Labour had only 31.7 percent. To infer that the Labour Party was on board while Thatcher embraced a programme of fiscal conservatism and free enterprise is not credible.
Additionally, it is relevant for the Chairman PTI to be made aware that the matter of privatisation was discussed during a Council of Common Interest (CCI) meeting with representation of all provinces, which prompted the currently dysfunctional Federal Finance Minister Ishaq Dar and the then State Bank Governor to state in the first Letter of Intent (LoI) submitted to the International Monetary Fund in the third quarter of 2013, a prerequisite for approval of the Extended Fund Facility and subsequent tranche releases, that "we are working on a time bound strategy for 65 Public Sector Enterprises (PSEs) approved for privatisation by the CCI to facilitate decisions to either privatise firms, restructure those with prospects of profitability but which the government wishes to retain in the public sector, or close non-viable firms." With respect to PIA, the LoI noted that "our restructuring plan includes stripping the non-viable components of PIA under a separate PSE - PIA2... we will service the guaranteed past loans of PIA2, apply voluntary "handshake" plan for excess workforce and liquidate... we plan to privatise 26 percent of PIA's shares to strategic investor."
And it is also germane to refuting Imran Khan's assertion that the government did not engage in debate on the issue of privatising PIA by pointing out that the National Assembly, of which he is a member, passed the PIA Act on 15 April 2016 whose validity expires on 15 April 2018, that provided for setting up of the PIA corporation into a public limited company; and "during the (two-year) validity period and subject to prior Company request, the federal government may issue orders providing for the transfer of specified assets to a relevant entity substantially on the terms set forth in the relevant arrangement and notwithstanding the repeal of the PIAC Act all guarantees given by the federal government to any person, including foreign or local institutions, to secure any of the liabilities of the Corporation shall remain in force and effect as though they were given on behalf of the Company."
It is, however, relevant and necessary to aver that opposing the privatisation policy without presenting an alternative is simply not tenable. Simply stating, as Imran did in this instance, that when in power his party would transform PIA into a world class airline without offering any plan does not suffice. This was precisely the claim made in the PML-N manifesto just before the 2013 elections - a promise that remains unfulfilled to this day. One would urge the PTI and any other political parties or groups that oppose privatisation of the entities that continue to sap the exchequer to come up with a viable alternative plan to achieve this objective rather than to simply state the desirable goal that has also been the modus operandi of the status quo parties namely the PML-N and the PPP.