Pakistan election panel pauses national airline sale
By Asif Shahzad
ISLAMABAD (Reuters) -Pakistan's election commission has asked the caretaker government to "refrain" from finalising a deal to privatise flag carrier Pakistan International Airlines pending a review, a letter from the poll panel seen on Monday said.
The Feb. 1 letter from the panel to Pakistan's cabinet secretary, seen by Reuters, comes days ahead of the Feb. 8 general elections.
"The caretaker government should refrain from taking any further steps including signing of an agreement in this regard till a decision is made by this commission," the letter said, directing the government to hand over all documents prepared for cabinet approval about the PIA deal.
The caretaker government, which did not immediately respond to a request for comment, is close to putting the loss-making airline up for sale after completing a restructuring plan, Reuters has reported.
Speaking last week, Privatisation Minister Fawad Hasan Fawad said the plan would be taken to the current cabinet for approval before a new government takes over following the election.
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 825 billion rupees in loans, creditors' money and losses.
The clean entity will be offered for sale.
The divestment into two entities has been carried out, said caretaker Prime Minister Anwaar ul Haq Kakar in an interview with local Geo TV on Sunday night, adding the process will be handed to the incoming government for further implementation including carrying out the sale after his cabinet approves it.
"It is not that simple that someone could reverse it," he said when asked what would happen if the incoming government sits on it.
He said the plan had already been approved by a high powered body known as the Special Investment Facilitation Council (SIFC) that was set up to seek foreign investments, which has civil and military representation.
In deep economic crisis, Pakistan agreed in June to overhaul loss-making state firms under a deal with the International Monetary Fund (IMF) for a $3 billion bailout.
The outgoing government of Prime Minister Shehbaz Sharif decided to privatise PIA just weeks after signing the IMF agreement.
The caretaker administration, which took office in August to oversee the Feb. 8 election, was empowered by the outgoing parliament to take any steps needed to meet the budgetary targets agreed with the IMF.
PIA had liabilities of 785 billion Pakistani rupees ($2.8 billion) and accumulated losses of 713 billion rupees as of June last year. Its CEO has said losses in 2023 were likely to be 112 billion rupees.
Progress on privatisation will be a key issue if the new government goes back to the IMF once the current bailout programme expires in March, analysts say.
(Writing by Shivam Patel; Editing by YP Rajesh, William Maclean)
