Caretaker cabinet approves PIA’s privatisation plan

ISLAMABAD: Pakistan’s caretaker cabinet on Tuesday approved flag carrier Pakistan International Airlines’ (PIA) privatisation plan, the prime minister’s office said, days after the election panel asked the government to “refrain” from finalising any deal.

The caretaker government has recently accelerated the process to put the loss-making airline up for sale after it completed a restructuring plan, Reuters has reported. Officials had said the restructuring plan would be approved ahead of the February 8 national election.

The cabinet gave its approval to the plan on the recommendation of Pakistan’s privatisation commission, a body assigned to sell off all loss-making state-owned enterprises (SOEs).

The restructuring plan completed by transaction adviser Ernst & Young has divested the PIA into two entities; one ‘clean’ one and the other to be parked in a holding company with legacy debt, which includes negative equity of Rs825 billion ($2.95 billion) in loans, creditors’ money and losses.

The clean entity will be offered for sale.

“These steps will help attract the investors toward PIA,” the statement from the prime minister’s office said.

In deep economic crisis, Pakistan agreed last June to overhaul the SOEs under a deal with the International Monetary Fund (IMF) for a $3 billion bailout.

The outgoing government decided to privatise PIA just weeks after signing the IMF agreement.

Ahead of election, Pakistan seals detailed plan to sell PIA

The caretaker administration, which took office in August to oversee the February 8 election, was empowered by the outgoing parliament to take any steps needed to meet the budgetary targets agreed with the IMF.