Mohsin Siddiqui (Chief Reporter)
Prime Minister Shahbaz Sharif regarding the completion of the privatisation process of PIA, there are 30 intricate steps that must be undertaken, marking one of the most complex transactions ever handled by the Privatization Commission.
According to top official sources, if all 30 steps are expedited, the privatisation process is expected to take a minimum of six months to a year to reach completion.
Detailing one crucial step, officials explained that the government must secure a No-Objection Certificate (NOC) from approximately 35 lenders who have provided loans to sustain the financially distressed PIA. While the timeframe for obtaining NOCs from each lender remains uncertain, it’s deemed unlikely that the privatisation can be finalized by the end of June 2024.
Drawing comparisons, officials cited the example of the Heavy Electrical Complex (HEC), whose Sale Purchase Agreement (SPA) was concluded in 2022, yet procedural requirements extended the process to 2024 before being transferred to the new buyer. The complexity of PIA’s privatisation indicates that completing it within a year would be commendable, according to the officials.
Sources reveal that previous caretaker ministers and the current PM were informed of the intricate nature of PIA’s privatisation, with initial commitments to achieve completion by June 2024.
However, skepticism arises regarding the feasibility of such accelerated timelines, with officials cautioning against hastily rushing through the process. It’s been communicated to relevant stakeholders, including the military establishment, that a smooth privatisation process requires at least six months to one year.
Key steps involve PIA’s division into two entities, a process necessitating several stages. Obtaining NOCs from lenders alone could span several months, officials added.
Moreover, there’s the risk of IMF objections concerning the unbundling of PIA. Settlement of Rs260 billion debt could incur an annual cost of Rs32 billion, along with Rs16 billion for restructuring domestic debt. The IMF emphasizes addressing underlying structural issues in the energy sector to ensure fiscal sustainability.
Despite claims from the last caretaker government that PIA’s privatization process is virtually complete, formal steps remain pending, as acknowledged by sources close to the matter.
