The PIA fiasco now
In a country where it is customary for some single news story to occupy most of the media space for some time consecutively, it is PIA’s turn now. The government has been on the receiving end of harsh criticism, owing to the issue. However, the PML-N camp sticks to the statement with highest of confidence that PIA privatisation is the best decision possible. In fact is giving out 26 per cent even considered privatisation?
Pakistan has always proven to be a nation-state that is resistant to change. Most of the time we remain stuck in the status quo. And if PIA has been state-owned for decades, then who can have the temerity to sell it off now? But again, the few voices of reason that we are still lucky to retain are more insistent not on whether to privatise or not, but what procedures should be followed and how a favourable situation can be created out of the current marsh of confusion that we are in.
“PIA starved of necessary resources for turnaround while Sharif bros shower money on commission-sucking projects like Orange train,” is what PTI Chairman; Imran Khan, tweeted on February 2.
But again, PIA did not wither away in just the tenure of the Sharifs. We have had a whole history of neglect and mismanagement. And that dates back to earlier governments as well.
Throes of privatisation in Pakistan
Historically, there was a wave of nationalisation in Bhutto’s regime followed by a wave of deregulation that started in 1992. The undisputed authority on economics Adam Smith said centuries ago that the governments should do what they are best at and the private sector should do what it is good at. So Smith argues for a clear-cut division of labour between the public and private sector. Building on his assertion, it is definitely not the domain of the government to run profit-making entities. The government should rather be focusing on providing basic facilities like health, education and focus on public development and expenditure.
Economic deregulation and privatisation is the norm in the world today. Why is such a hue and cry being raised in Pakistan?
Dr Kaiser Bangali, seasoned economist and adviser to Baloch government, shed light on his reservations while talking to DNA.
“The issue in Pakistan is the lack of a privatisation policy in Pakistan,” he stated.
“There has not been the clarification of any policy in parliament or in cabinet. What exactly are the motives and the purposes behind privatisation? There has not been any fruitful discussion on this issue on any forum.”
Government apologists have repeatedly mentioned on every privatisation drive that government should not be running the profit-making entities, and secondly government should not be lingering on the entities in loss.
Dr Bangali finds this ironic, given the historic account.
“In 1992, when various industries and one bank were privatised, the government supposedly wanted to get rid of the entities in loss,” he narrated. “But strangely enough, the first institutions to be nationalised were the ones in profit. Millat Tractors is one example.”
“Later, Shaukat Aziz too took this position,” Bangali went on. “He too propagated that it was not the role of the government to run profit-making entities. Ok, one may choose to disagree but this is a position. But then PTCL was sold to Etisalat, which itself is a state enterprise.”
This is a valid point raised. What was the motive of privatising a state-owned enterprise to the state enterprise of another state?
“Ok, so the state is not supposed to run the profit-making entities,” Bangali raised his objection. “But then are other states supposed to run our profit-making entities? There is sheer controversy in action and words because of a lack of policy.”
Moreover, whenever any privatisation scheme is presented, almost always there are serious issues with valuation of land. When Pakistan Steel Mills was under consideration for privatisation, even then the same issues were raised, that the assets were being undervalued.
“Whenever national entities were sold off,” Bangali highlighted this controversy, “not just the businesses were sold, but the property as well.”
With these properties undersold, obviously the buyers were bound to earn money out of the overall deal.
Therefore, rather than just debating in favour of or against privatisation, it is high time that Pakistan takes a more rational approach toward these issues. Not everything in life is black or white, most things are gray. And when it comes to privatisation, previous mistakes have made the public and the economists lose faith in the process. So this will have to be re-thought. If privatisation is to take place, then the valuation has to be appropriate. And rather than just selling off for the sake of selling off, experts should sit and do a thorough cost-benefit analysis, if the benefits of the deal are greater than the costs.
“I am not saying all this for some ideological reason,” Bangali clarified. Obviously he cited the relevant facts as well, while presenting his case.
PIA’s case under question
There is certain argumentation and counter-argumentation going on. Many of the renowned columnists agree to the idea of privatisation. However, many are against the idea.
Most upset by this privatisation scheme are the employees. The recent scenes of strikes, and the consequent backlash by the government, are some of the disturbing scenes that are enough to haunt any patriotic citizen.
One of the PIA employees talked to DNA, on the condition of anonymity.
“As an employee and as a Pakistani, I am against privatisation,” she vehemently argued. “The government is just trying to fulfil its own interests. Some of the prominent people have their own handling agencies and airlines. PIA strike is benefitting them in terms of business, and these influential people are not letting the government come on the negotiation table, hence the prolonged strike. This is the first time such a long strike has hampered operations of PIA.”
This is sad to see that there remains such trust deficit in the PIA employees. If PIA has failed to keep its employees happy, how could they be productive? When it comes to the world of management, not everything is about cash and liquidity. Rather job satisfaction and employee commitment are important organisational constructs. In PIA’s case, not only are the employees unhappy, but they are also wary of the intentions of the state. Not an ideal situation.
“The government is just interested in the property that PIA owns,” continued the PIA employee. “All of PIA’s properties are located in central places, and have a lot of financial worth. The government is going to undervalue the property so it can sell it and then distribute the ‘spoils’ with its own endeared ones. PIA being a corporation does not allow them to sell it off and enjoy the deal. So they are aiming to make it private for their own interests.”
However, that is just one side of the picture.
Kamran Afzal, an accounts graduate based in Islamabad, thinks PIA needs to be privatised.
“Issues are being raised for no reason and all,” he sounded disgruntled. “Why should the government be putting up with daily losses when it can get rid of it? Our economy is not good already, and we want to keep additional losses. PIA has just become a burdensome elephant.”
He further continued his analysis.
“The private airlines are operating and they are operating pretty successfully without any losses. So let us just privatise PIA as well. New management will come. The corruption and nepotism characteristic of state enterprises will no longer be there. And PIA would become like other airlines.”
Another point that the government is raising is the fact that not all of shares are being sold out.
“And yes what is the hue and cry all about?” questioned Kamran. “I mean just 26 per cent shares won’t do any harm, would they?”
Bangali however has a different take on the issue.
“Whenever any entity has been privatised in the past, just 26 per cent have been offered,” he stated the obvious. “Earlier it was termed as privatisation, now word game is being carried out.”
Root causes of the mess
So apparently there is a lot of confusion and a lot of commotion surrounding the issue. But PIA was ok once upon a time. Why is it on the ventilator now? There would have hardly been this hue and cry, if it were not a loss-making entity. Now, it is more of a gone rather than a going concern.
“PIA’s issue is corruption,” said the PIA employee.
“There is a lot of nepotism rampant in the organisation. Unnecessary vacancies are generally announced at the higher management level, and the favourites are given these posts. Many of them do not even have the academic credentials that are requisite for eligibility of such posts.”
She further continued spilling the issues out.
“PIA is not in loss. The reason behind the current scenario is the corruption of higher management, the excessive salaries and wrong policies. PIA is the identity of Pakistan all over the world. It gives less time-consuming routes in lesser fare. Take the Lahore-London route for example. It is not a connecting flight in PIA, as opposed to Ettihad. There are other positive points of PIA as well. PIA does not charge anything for transporting dead bodies internationally. Would any other airline do so? After Bhoja and Air Blue crashes, PIA brought the people free. Having a national airline has merits. Only if the corruption and nepotism are eliminated, things would improve manifold.”
So well, picture does not look all bad. There are other issues too though. Planes getting grounded and going obsolete are other issues. Again there is overstaffing. So not everything is about corruption. Rather it is incompetence, inefficiency and negligence as well.
“But if you privatise your national airline, where would you look at in time of national crisis?” questioned the PIA employee.
Well, food for thought.
What next
Ok, so what is next? Do we privatise PIA? Do we not privatise PIA? And what do we do in either case. This is what we should be exploring. Rather than giving conclusive evidence, it would be prudent to explore both options.
- No privatisation
Kaiser Bangali still sees hope and gave his comments.
“As an economist, I can say with full responsibility that it is possible to make PIA profitable again. There has been marked improvement in the efficiency of operations in the last six months. I reside in Quetta and travel a lot via PIA to Islamabad and Karachi for my work affairs. These days hardly any flight gets delayed for more than ten minutes.”
The PIA employee too was confident that there is no need for privatisation.
“If overstaffing is such an issue, then why not fire those with fake degrees?”
- Privatisation
If a team of economic experts come up with the opinion that privatisation is inevitable, even then it should be thought out how to go about it. Luckily Kaiser Bangali has answer for this too.
“if privatisation is to take place, then separate the assets, the land, the property, the hotels abroad from PIA corporation,” he stated. “Sell just the business and if that happens, we will get serious buyers interested in reinvigorating the business.”
These are tough times obviously in terms of national harmony, and tough decisions await us. However, rather than solely blaming the government let us focus on how to come out of this fiasco safe.
