PIA's second privatization attempt underway as govt moves to offload shares

In an attempt to sell off loss-making State Owned Enterprises (SOEs), the board of the Privatisation Commission has advocated for authorities to pursue selling off most of the government's shares in Pakistan International Airlines (PIA). As per credible reports officials are also exploring a partial sale of the SOE as opposed to privatising it entirely.

As per a press statement, Muhammad Ali, the advisor to the Prime Minister on matters pertaining to privatisation, has reportedly suggested the Cabinet Committe on Privatisation, to sell off 51 to 100 percent of PIA's equity that is currently held by the federal government. If the committee acts on Muhammad Ali's advice, Islamabad will lose managerial control over the company.

However, the decision on the amount of equity the government is willing to give up will be decided after key officials and authorities engage with potential investors. The government recently attempted to privatise the national carrier which remained unsuccessful as many of the six chosen parties were hesitant to partner with the government due to its excessive control over decisions. 

If the government can successfully negotiate the sale of over 50 percent of the company, reservations regarding the government making decisions will dissipate - as private entities will gain decision making power. These reservations hold merit as officials running the national carrier, arguably, have a bad track record when decision making is concerned. The bloated workforce is one of the many administrative inefficiencies PIA faces. 

However, privatising PIA has become a matter of great urgency in the past few weeks. As per credible reports, Islamabad has to privatise PIA to appease the International Monetary Fund (IMF) as the government has made assurances to the international creditor that it will sell off the airline by July 2025. 

While the general public has historically been against privatisation of PIA, it could relieve significant pressures on the national exchequer. Since PIA is owned by the government, any losses that the company incurs has to be borne by the government. These costs are ultimately borne by taxpayers who have to finance PIA's losses to keep it operational.

However, many believe that the government may have to sell the company without the liabilities that the company has accrued over time. While this may attract more buyers, it could result in tax payers being stuck with a 45 billion rupee charge - an amount that could take years to pay off.