WASIM IQBAL & NUZHAT NAZAR
ISLAMABAD: Privatisation Commission has invited a fresh expression of interest (EOI) from Financial Consultant for a period of six months for the privatization of Pakistan International Airlines (PIA).
Sources said to proceed ahead with the privatization of PIACL, PC will have to undertake necessary actions to hire fresh Financial Advisors (FA) or re-engage the services of a former FA whose financial advisory services agreement expired on October 3, 2017.
In October 2014, PC appointed a consortium of M/s Dubai Islamic Bank, IATA Consulting, Deloitte, HaidermotaBNR, Freshfields Bruckhaus Deringer, Abacus Consulting, APCO, and Prestige as FA for the transaction.
The Privatisation Ministry reiterated its commitment to privatize the airline by selling its 49 per cent shares besides separating core and non-core business of the national flag carrier in a National Assembly’s Standing Committee on Privatization held in March 2018.
The opposition parties have expressed serious concern at the government’s decision to proceed with PIA privatisation a mere 54 days before completion of its term.
An official of PC told Business Recorder that six time-bound decisions relating to PIA made by the Privatization Commission’s Board are awaiting approval from Cabinet Committee on Privatization (CCoP) in privatization since the first week of March.
1- Transmission of scheme of arrangements/ order to PIACL pursuant to section 4 of the PIAC (Conversion) Act within three weeks.
2- The request by PIACL to federal government in accordance with section 4 of the PIAC (Conversion) Act to be issued within four weeks.
3- Valuation of assets pertaining to airline business of PIACL to be carried out pursuant to sub-section 5 of the section 4 of the PIAC (Conversion) Act, within 6 weeks.
4- Advertisement seeking EoI from private sector partners and investors for minority shareholding in PIACL to be issued within three months.
5- Privatization Commission has invited fresh EOIs for financial advisor and also negotiating with former FA to re-engage them under same terms and conditions.
6- PC to re-engage the services of FAs under same terms and conditions.
The FA will be responsible for strategic financial planning, financial forecasting and value creation in the corporation’s development.
In November 2, 2017, the PC board decided to reinitiate the process of privatising PIACL.
Secretary PC Syed Irfan Ali Shah said that divestment of PIA would be completed at the earliest (projected sale of 49 percent shares held by government) and a shareholders’ agreement will be executed to outline the methodology that envisages management control retained by the federal government in line with best international practices.
The secretary maintained that parliament has given PC the mandate to complete the transaction of PIA by April 15, 2018. He added that PC still has to re-engage the services of FA, while PIA also requires three months to look into the draft implementation plan submitted by FA and come up with a viable option.
Earlier, Daniyal Aziz briefed media about the different phases of PIA’s privatisation process, arguing that the Phase-1 of the restructuring of PIA has been completed, and Phase-II is now in process.
He explained that as per the law, PC is completing all the legal and financial prerequisites for the privatisation of PIA and the process may not be completed during the tenure of the present government.
A senior Member of PC Board on the condition of anonymity told Business Recorder that Privatization Commission had stopped working on privatization of PIACL, Pakistan Steel Mills, Mari Petroleum and SME Bank after former Chairman PC Board Muhammad Zubair was appointed Governor Sindh in January 30, 2017.
He maintained that all the working on privatization of PIA, Mari Petroleum and SME Bank was held in Cabinet Secretariat; he further claimed that no meeting of PC Board was held during the last three months.
He further said that Rs 50 billion envisaged in budget 2017-18 through privatization proceeds was not achievable.
Responding to another question regarding privatization programme of Pakistan Muslim League (N), he said that the next government would come up with its own privatization programme and it could reinitiate the whole process of privatization of PIACL.
