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Print Print 2023-12-01 PIAA (Pakistan International Airlines Corp) 26.70 Decreased By ▼ -3.09%

Govt embarks on restructuring PIA, PSM, railways

  • Federal government has periodically been releasing unbudgeted support to pay the salaries of Pakistan Steel Mills employees since 2013
Published December 1, 2023

ISLAMABAD: The government has undertaken restructuring of Pakistan International Airlines Corporation Limited (PIACL), Pakistan Railways (PR) and Pakistan Steel Mills (PSM), experiencing cumulative monthly financial losses of Rs 106.87 billion in addition to the budgetary support package of Rs 43.469 billion for financial year 2023-24.

Since June 17, 2019, four and a half years after being on the list of SOEs to be privatised, PSM was delisted from the active privatisation list and handed over to the Ministry of Industries and Production (MoI&P) for revival. PSM registered total losses of Rs 206 billion till June 30, 2022 with three out of four Chinese companies vying for PSM withdrawing their interest.

Federal government has periodically been releasing unbudgeted support to pay the salaries of PSM employees since 2013 while production operations of PSM remain suspended since June 2015.

PIA divestment: PC inks ‘FASA’ with FA

PIACL, with total losses of Rs713 billion till June 2023 (rising by Rs153 billion per annum since 2012), is being prioritised for privatization during the caretaker set-up, (whose mandate is 90 days though on average it takes about 460 days to complete one privatisation transaction under privatisation law), which on August 7, 2023 placed PIA on the active privatisation list but so far has met with little success.

This Tuesday pasta Financial Advisory Service Agreement (FASA) was signed with Ernest and Young-led consortium necessitating cabinet to use its emergency powers to grant approval for hiring the firm’s services.

The government recognises, from previous detailed feasibility studies, that PIA as structured today cannot be privatised as one entity, and that its non-core functions and assets will have to be separated and its debt liabilities of close to Rs300 billion will need to be taken over by the government. The core assets identified for sale are routes, landing rights, core engineering services and air service agreements.

Pakistan Railways’ total financial losses at present amount to Rs48 billion including Rs 40 billion pension payments. PR liabilities at present stand at Rs24 billion which include Rs 20 billion in pensions, Prime Minister’s (PM) assistance package and benevolent fund.

One of the major challenges faced by Pakistan Railways is its expenditure on salaries and pensions, which has exceeded its total generated revenue.

Despite achieving record revenue of Rs62billion during the financial year 2022-23, PR fell short of meeting its expenditure by Rs7.42 billion. PR has set a target of Rs80 billion for 2023-24, with a revenue target higher than the previous year by over Rs10 billion.

An official of PR told Business Recorder that in fiscal year 2022-23 it generated Rs62.5billion revenue from its operations, Rs3.2 billion from rent on land and over Rs 2 billion from selling scrap. Of this amount, Rs40.607billion was spent on pensions, and Rs35.7 billion on salaries.

According to 2020 data, out of ten loss-making SOEs, PSM, PIA and PR contributed 25 percent (Rs 106.87 billion) of total losses estimated at Rs 418.97 billion per month. The budget 2023-24 does not indicate any receipt from privatisation proceeds.

The privatisation of SOEs remained a top agenda item during the latest review of the $3 billion IMF standby arrangement. The IMF supports speedy privatisation of PIA, PSM, re-gasified liquefied natural gas (RLNG) power plants, and state-owned electricity distribution companies during the current financial year.

Copyright Business Recorder, 2023

Comments

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KU Dec 01, 2023 10:10am
Sad news. If anyone wants to witness the waste of funds and corruption, this will be an ideal example of how it is done by the Raj.
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Anila Qadri Dec 01, 2023 12:15pm
Elections aren't happening
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Parvez Dec 01, 2023 01:05pm
Just to entertain a few self serving corrupt people who eventually will fly abroad to live where their stolen wealth is stashed.....these white elephants like PIA and Steel Mill which are financially DEAD are kept propped up on country's money which Pakistan has to begg and borrow. How shameless are the people who were / are involved in this daylight loot and plunder..... let us not forget the uneducated part played by our superior court in all of this.
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Actual Truth Dec 01, 2023 04:52pm
PSM once a profit making organization was about to be privatized with billion of Dollars coming to the Government kitty but an inept and egotistic CJ hell bent on settling scores ensured that not only that this did not happen but also plunged this country into decade of darkness. And this organization was not alone, look what happened in case of Rekodiq but there is no accountability for him.
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Yousuf Ibnul Hasan Dec 01, 2023 05:21pm
Why decessions are delayed?Red Tape or searching for a Son-in-Law to oblidge? A common thought that come in common mind in awaiting for a currupt government to take charge of the office so that similar game to be played like MCB Bank to National Group. PIAC and PCM will be profit making organization as and when management will be private party. The delay it take the higher will be debts on the two. Do not victimize the poor tax pair.
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M.sufyan Dec 01, 2023 07:26pm
that its verri good for pak
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