ISLAMABAD, MAR 21 (DNA) – Massive liabilities worth Rs324 billion has become a major headache for stakeholders inolved in the privatisation of Pakistan International Airlines (PIA). In a bid to expedite the process, the Privatisation Commission (PC) has decided to shift the liability to another company to facilitate the sale of PIA.

Privatisation Minister Daniyal Aziz, during a meeting of the National Assembly’s Standing Committee on Privatisation, said that as per rules and business of the government, the PC is forming a new company where loans and other liabilities will be parked. This will make PIA’s air transport business financially robust and resultantly feasible for third-party investment/ shareholding.

Briefing the committee, he said the privatisation of PIA would be completed at the earliest and a shareholders’ agreement will be executed to outline a method to exercise management control by the federal government in line with best international practices, according to PC’s plan.

Daniyal Aziz, while responding to a question regarding the different phases of PIA’s privatisation process, said that the restructuring of PIA has been completed in Phase-I, and Phase-II is now in process.

He explained, “As per the law, PC is completing all the legal and financial prerequisites for the privatisation of PIA and it is not necessary that it will take place while the present government is in power.”

However, PC Secretary Syed Irfan Ali Shah said that they were running against time but it did not mean that they would compromise on transparency by making a hasty decision.

The secretary maintained that the 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 required three months to look into the draft implementation plan submitted by FA and come up with a viable option.

Talking about PIA’s losses, Daniyal Aziz said that since PIA is facing a loss of Rs150 million on a daily basis, and Pakistan Steel Mills (PSM) is losing $300 million in annual losses, it is prudent for the government to take a decision as soon as possible.

As per the available data from December 2015, PIA’s liabilities stood at Rs324 billion, assets were worth Rs115 billion, and equity was Rs209 billion during PIA’s pre-restructuring. However, the liabilities reduced to Rs72 billion, while the assets went down to Rs96 billion, and equity to Rs24 billion in post restructuring.

According to a brief, to proceed ahead with the privatisation of PIA, PC will have to undertake necessary actions to re-engage the services of Financial Advisors, since the financial advisory services agreement expired on October 3, 2017.

The minister said that the services of FA were expired during the period when Ahmed Nawaz Sukhera was appointed as interim secretary Privatisation, and added that no process was initiated to re-engage FA. He said that advisors have prepared a draft scheme of arrangements, for transfer of specified assets into a new entity, and a draft memorandum of association, and draft articles of association for incorporation of the new entity.

Daniyal said the case of re-engagement of the services of FA under same terms and conditions would be sought from Cabinet Committee on Privatisation following the approval of PC’s board.

According to documents, PC’s board in November, 2017 recommended that for the privatisation of PIA, sub-section 4 of section 4 of the PIA (Conversion) Act 2016 may be amended, however, the same may not be attainable as PML-N had no majority in the Senate.