Under a condition of the $6.2 billion IMF loan programme, Pakistan is bound to invite investors to participate in PIA’s privatisation through media advertisements before the end of this month and to sell off the carrier by June next year.
The PIA ordinance is likely to be promulgated in the next 72 hours, before the new National Assembly session begins on December 7, a top government functionary revealed .
“Without promulgating this ordinance, the government will not be able to meet the December 31 deadline set by the IMF for inviting ‘expressions of interest’ (EoIs),” he said.
It will be the second time in less than a week that the government will bypass parliament in order to meet IMF conditions and save the two-year-old loan programme. On Monday, it introduced a mini-budget to levy Rs40 billion in new tax measures without taking the legislature into confidence.
The government administers the national flag carrier under the PIA Act of 1956. Without amending this legislation, the government will be unable to transfer management control of the airline to a strategic investor.
“Due to this legal hindrance, the financial adviser hired for PIA’s privatisation cannot give the transaction structure,” the government functionary said. “And without the transaction structure, the government cannot invite EoIs from prospective bidders before December 31.”
The planned ordinance will convert PIA Corporation into PIA Company Limited, according to the official. The government will then, in the second phase, divide PIA Limited into two entities, separating the airline’s liabilities so that they are not transferred to the new buyer, he said. As of March this year, PIA’s liabilities have ballooned to Rs297 billion.
The official said that the government can offer from a minimum of 26% of shares to a maximum of 74% of shares to the strategic investor. “The final decision will be announced in the EOIs,” he added.
When contacted, Privatisation Commission Chairman Mohammad Zubair said the process of privatising PIA will be accelerated in the coming days. He refused to comment on whether the government will promulgate an ordinance to repeal the PIA Act. Sources said the government has already taken the IMF into confidence over the ordinance. They said the government has worked out this arrangement to avoid obstacles it might face in the Senate, where the ruling Pakistan Muslim League-Nawaz does not hold the majority.
Although the IMF is usually skeptical of any such arrangement as presidential ordinances lapse within four months of promulgation, according to sources, the lender did not object to plan worked out by Finance Minister Ishaq Dar.
As a backup, the government will also introduce a bill in the National Assembly and try to get it passed at the earliest, the top government official said. “After the lower house’s approval, the government will introduce the bill in the Senate.”
Sources said the government will approach the top leadership of the Pakistan Peoples Party for support in the upper house. Failing that, the government will call a joint session of parliament.
“A joint session can only be called, if any of the two houses reject any proposed piece of legislation,” said former Supreme Court Bar Association president Kamran Murtaza. An official, however, said a joint session can also be called if the Senate does not take a decision within the constitutional period of three months after the introduction of a bill in the house.
