Pakistan National Airline (PIA), which was once the spearhead of Pakistan's economy and was recognized worldwide with the slogan of "Bakmal Lug Lajawab Service",  has now been suffering from heavy losses with the passage of time. Instead of double day and night quadruple development, it became a "national patient" for which trillions of rupees were spent from the treasury to restore its health, but "the disease increased with the passage of time and now it is deep in losses.

The cancer of mismanagement, corruption and nepotism spread in its veins. Considering it incurable, the economic doctors suggested this option to privatize it, but whenever the final decision came, the PIA management, employees, civil aviation ministry and the opposition would stand in the way.   The caretaker government also decided to privatize it. The Board for Privatization Commission also appointed a financial advisor for the transaction but still some hurdles remained.  Prime Minister Shehbaz Sharif, who has become active for economic recovery soon after assuming office, has sought the final schedule for the implementation of the privatization of PIA and has issued instructions to the Ministry of Privatization to submit it within days.  He bluntly said that any laziness and carelessness will not be tolerated in this process. 100% transparency should be ensured at all stages.  An important meeting was held last week under the chairmanship of the Prime Minister, in which the issues related to the progress of privatization of the national airline so far were reviewed and the proposed road map of FBR was approved.

The new government is very committed to economic recovery, and those at the helm of affairs are  right to say that the goals should be set realistically and the speed of implementation should be faster.  We don't have another moment to waste. This is the question of Pakistan's future and economic recovery. Media reports say that the formal process for the demerger of Pakistan International Airlines began last year after the Privatization Commission appointed a financial adviser for the transaction in the caretaker set-up.  According to a report, a consortium led by Ernst & Young  had emerged as the winner among 8 interested firms that submitted their technical and financial proposals to hire financial advisors for the privatization of Pakistan International Airlines Corporation. PIA was the best airline in the world from the 50s to the 70s, the princes and rulers of the world preferred to travel in it, not only this, but this airline offered its planes to the airlines of the Middle East and many other countries. Then the national airline became a victim of mismanagement and personal interests due to bad luck.

According to the information, PIA started becoming unprofitable for the last many decades and needed government subsidies. By the end of 2017, the public airline had a debt of $3 billion. And during the corona, the PIA was in debt of $3.3 billion. And it needed government bailouts to continue operations. In an audit , it was revealed that in recent year at one point the,  PIA operated 46 empty flights without any passengers, which caused a loss of 11 lakh dollars to the airline in a single year.  Along with this, 36 Hajj flights were also operated without passengers. In these circumstances, whenever the government decides to privatize this institution, the PIA management and employees, the Ministry of Civil Aviation and the opposition together oppose it. It is necessary to find a way which is acceptable to the government and the airline staff, otherwise the government itself will have to make a decision which may be bitter for some people. It may be mentioned here that  a major cause of Pakistan's financial crisis is the loss-making institutions under government control. Among them, Pakistan Railways, PIA, National Highway Authority, Pakistan Steel Mill and power generating companies are on top. Caretaker Privatization Minister Fawad Hasan Fawad revealed the facts in a press conference that by 2020 the losses of these institutions were equal to seven percent of the GDP which has now increased much more. 15 big companies including PIA and Steel Mill have a debt of thousands of billions of rupees.   Privatization of these institutions has been on the agenda of several previous governments, but no substantial progress could be made in the past due to the fear of negative reactions at the public and political level.  However, according to the decision of the previous PDM government, the caretaker government was busy planning to sell loss-making Pakistan International Airlines.  And the new government also seems to be working on privatisation of the loss-making SOEs. It may be recalled here that the former Caretaker Federal Minister for Privatization had revealed in a conversation with Reuters last year that 98 Percent of the work had been done.

According to two sources close to the privatization process, the 1,100-page report by Ernst & Young will offer buyers a 51 percent stake with full management control after the airline's debts are transferred to a separate entity.

It should be noted that PIA had liabilities of 785 billion rupees and a loss of 713 billion rupees till June last year. In view of the serious economic crisis, Pakistan bailed out three billion dollars with the International Monetary Fund in June last year. It was decided to privatize loss-making government institutions while concluding the contract. The former PDM government had taken the decision to privatize PIA a few weeks after the signing of the IMF agreement. Subsequently, the then caretaker government that assumed office on August 8 last year, the outgoing parliament approved the budget agreed with the IMF.

In fact, privatization of all loss-making public institutions is essential to overcome the economic crisis. The nationalization experiment has failed almost all over the world because politically motivated recruitment, financial corruption, nepotism, theft of work and other malpractices easily give way to state-owned enterprises. Provision of justice, establishment of law and order, law enforcement, foreign affairs and finance system which are limited to basic matters due to which even a short cabinet is enough to run the business of the state and get rid of unnecessary government expenses while private for economic development.  Ample opportunities are provided to the sector by providing all fair facilities of safe investment. The need of the hour is that this method should be adopted in Pakistan as well and the process of privatization should not be opposed for temporary political interests.

Published in The Daily National Courier, March, 11 2024

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