In an effort to mitigate Pakistan’s economic challenges, Prime Minister Shehbaz Sharif’s administration has accelerated its privatisation agenda. Finance Minister Muhammad Aurangzeb recently announced the government’s intention to complete the privatisation of Pakistan International Airlines (PIA) and three power distribution companies (Discos) before the close of 2024. This is a pivotal move aimed at restructuring key state-owned enterprises (SOEs) to enhance efficiency and attract investment.
Privatisation Plan for PIA and Discos
Speaking to a private news channel, Finance Minister Aurangzeb reaffirmed that the privatisation of PIA and the three Discos is on track to be finalised by the end of the year. The decision comes at a time when Pakistan is grappling with deep economic woes, with the government looking to streamline state assets and improve fiscal discipline.
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The privatisation of PIA, initially set to conclude by October 1, has been delayed by a month to October 31. This extension is attributed to several issues, including low bidder interest, legal disputes, and concerns over the airline’s ageing fleet and civil aviation regulations. The move, however, is seen as critical to addressing the airline’s long-standing operational and financial inefficiencies.
Aurangzeb also noted that power sector reforms are underway, with the government focusing on overhauling the Discos to reduce losses and improve service delivery. These reforms are expected to bolster investor confidence, paving the way for a smoother privatisation process.
Wider Privatisation and Rightsizing Agenda
PIA and the Discos are not the only state-owned entities in the crosshairs for privatisation. The government has identified several more SOEs that it plans to privatise under its “rightsizing” policy. Last week, sources revealed that companies such as Pakistan Stone Development Company and Pakistan Automobile Corporation have been slated for privatisation. Other entities, including the Pakistan Institute of Management, Khadi Crafts Development Company, Agro Food Processing Facilities, and several others, are also on the list.
In addition to these, Aurangzeb highlighted that the outsourcing of operations at Islamabad and Karachi airports will be conducted in phases, with the aim of enhancing efficiency and profitability. The government is also working on a rightsizing and restructuring programme for several ministries and departments, with these reforms expected to be completed before the next fiscal year.
Debt Restructuring and Economic Stability
Addressing concerns within the power sector, the finance minister disclosed that discussions are ongoing with Chinese authorities regarding the re-profiling of debt tied to the China-Pakistan Economic Corridor (CPEC) projects. CPEC remains a cornerstone of Pakistan’s economic development, and any debt restructuring related to it will play a crucial role in alleviating financial pressures.
Aurangzeb emphasized that the government is taking all necessary measures to ensure that its privatisation goals are met. The ultimate objective is to offload non-performing and loss-making SOEs, while simultaneously implementing comprehensive power sector reforms to stabilise the economy.
Challenges and Opportunities
The privatisation push by Shehbaz Sharif’s government, while ambitious, is fraught with challenges. The low interest from potential bidders for PIA, legal complications, and operational inefficiencies in the power sector have already delayed progress. Moreover, there are concerns about whether the privatisation of such key national assets could result in significant job losses or affect service delivery.
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However, the administration remains optimistic that the restructuring of these SOEs will open up new opportunities for investment, improve financial performance, and contribute to the broader goal of economic recovery.