The privatisation of Pakistan International Airlines (PIA) seems improbable, as the government would be unable to transfer management control without amending the PIA Act of 1956.
The interesting development unearthed due to one of the conditions set with the International Monetary Fund (IMF).
The government also ready revised the deadline to June 2015 and December 2015 to put PIA on the active list of privatisation
During the last few days, Finance Minister Ishaq Dar chaired a couple of meetings to find a solution to the legal hindrance that may derail the process of PIA’s privatisation, said the sources.
The legal obstacle for the ruling PML-N government lacks majority in the upper house of the parliament (Senate), for which PML-N needs support of the Pakistan Peoples Party (PPP) that has 27 senators. The ruling party PML- N has only 26 senators and will need support of other parties to get the bill passed from the Senate.
The Privatisation Commission came to know off the legal hindrance during the due diligence process of PIA, which was carried out by the financial advisor that highlighted ill planning on part of the government to handle one of the most complex transactions to date.
The government administers the national carrier under the PIA Act of 1956 that states it cannot transfer its shares to any other party. The officials said the government discussed the option of converting PIA Corporation into a public limited company by amending the law.
The PPP has been opposing PIA’s privatisation. Senate Chairman Raza Rabbani of the PPP has been a vocal opponent of PIA and Pakistan Steel Mills’ privatisation.
In addition to legal challenges, the government is also facing problems in resolving inter-ministerial differences, as the Aviation Division is not in favour of privatisation.
It has been pursuing a restructuring plan and has acquired 14 jets on lease in recent years and desires to add seven more including three Boeing 777, ER 300.
