PIA, Discos’ sell-off plans: Fawad may be requested to continue as minister

ISLAMABAD: Minister for Privatisation, Fawad Hasan Fawad may be requested to continue as privatization minister to implement the privatization plans for Pakistan International Airlines (PIA) and Distribution Companies (DISCOs).

His confirmation by the next cabinet is considered highly likely given that he enjoys the confidence of the stakeholders and is a confidante of PML-N supremo Nawaz Sharif whose party is likely to lead the next government. Fawad was appointed as caretaker Privatization Minister on September 16, 2023 and his primary efforts focused on preparing PIA and Distribution Companies (DISCOs) for potential privatization.

On February 6, 2024, federal cabinet approved the restructuring of PIA on the recommendation of the Privatization Division. Financial Advisor had formulated a financial restructuring plan of PIA in line with international best practices under which the airline will be divided into two companies, Top-Co and Hold-Co. The accumulated losses of PIA reached to Rs 713 billion till June 2023.

Ahead of election, Pakistan seals detailed plan to sell PIA

On February 7, 2024, the Cabinet Committee on Privatisation (CCoP) deferred approval of the Power Division’s proposal to give DISCOs management to private sector on long-term concession agreement basis, seeking more information and comprehensive replies to questions raised by other ministries.

The ECP halted the process on the grounds that the caretaker government had no authority to take any major policy decision under Article 230 regarding state owned entities.

The privatization of K-Electric in 2005 and its sustained reliance on subsidies due to government policy of tariff equalization will negate the positive aspect of privatizing any other Disco, experts warn.

In 2023-24 the government budgeted K-Electric’s tariff differential at Rs 171 billion and tariff differential outstanding claims at Rs 127 billion.

A former member PC board, Irsalan Hoti told Business Recorder that caretaker government is primarily tasked with ensuring smooth elections and to avoid significant policy changes. “This constrained Fawad’s ability to implement major privatization initiatives”, he added.

At present, 25 SOEs are in active privatisation list including 14 energy sector, two industrial sector, one aviation, four each of financial and real estate.

Copyright Business Recorder, 2024