- Cabinet committee discusses issues of PIACL, Steel Mills after detailed presentations
ISLAMABAD: The Cabinet Committee on Privatisation, which met with Prime Minister Shahid Khaqan Abbasi in the chair here at the PM Office on Friday, gave go-ahead to the proposal for initiating restructuring process in the Pakistan International Airlines Corporation Limited (PIACL).
The go-ahead was given after a detailed presentation on the PIA Corporation and the discussion that followed in the meeting that discussed issues related to PIACL and the Pakistan Steel Mills (PSM). During the meeting, it was decided to segregate core and non-core functions of the organisation.
Federal Minister for Privatisation Daniyal Aziz gave a detailed presentation on various issues including the financial challenges faced by the two organisations and possible way forward for addressing those issues on a permanent basis.
In his remarks, Prime Minister Abbasi observed that past mismanagement and neglect of the two important organisations had not only resulted in the creation of huge financial liability on annual basis for the government but also caused great difficulties for the employees.
The meeting discussed in detail various administrative, financial and employees related issues of the Pakistan Steel Mills. A proposal for the steel mills entering into a concession agreement with investors on revenue-sharing basis also came under discussion.
The prime minister directed that all options should be explored and a comprehensive plan should also be worked out for addressing the employees-related issues. The government expedited efforts to divest its stake from PIA, which suffered more than Rs145 billion in losses during the last four years.
On the other hand, PSM has incurred a loss of around Rs188 billion in the last one decade despite injections of bailouts from the government. During a recent meeting with the journalists, Prime Minister Abbasi advocated the privatisation of PIA and the Civil Aviation Authority (CAA).
“PIA is incurring a loss of Rs150 million daily to the national kitty,” he had said, adding that the Civil Aviation Authority lacked the capacity to run the advanced airports like the new international airport in Islamabad.
It is pertinent to mention here that five new airlines are expected to venture into Pakistan’s aviation industry in the next one year in the latest sign of intensifying competition in the backdrop of an open skies policy, which may bring down passenger fares, but will pose fresh challenges to the PIA.
Askari Air, Air Siyal, Go Green, Liberty Air and Afeef Zara Airways are going to enter the airspace in a bid to take a slice of the growing air travel market. Over the past five years, the air traffic has swelled 40% to 20 million passengers, Shahzad Dada, the chief executive officer of Standard Chartered Pakistan, said recently.
Most of the upcoming carriers will target low-profit, far-off destinations like Gwadar, Turbat, Panjgur, Khuzdar, Dalbadin, Zhob, Skardu, Chitral, Gilgit, Bannu, Parachinar and Rawlakot and Muzaffarabad in Azad Jammu Kashmir. Of these, Gwadar, Gilgit Baltistan, and Turbat could generate immediate profits because of their tourism potential and work on the China-Pakistan Economic Corridor (CPEC) projects.
For these remote regions, the new carriers will bring airplanes suitable for small airports. The national flag carrier has thus far taken advantage of these routes as it is the only player catering to air travel needs of these areas. PIA, which once helped Emirates airline of the UAE by giving two aircraft with crew, is now beset with financial trouble with losses going beyond Rs300 billion.
In a meeting with British Trade Envoy to Pakistan Rehman Chishti on Wednesday, Daniyal Aziz sought investment from the UK government in loss-making PIA and the Pakistan Steel Mills. He apprised the delegation of Pakistan’s privatisation programme and welcomed UK investment in the companies listed for early privatisation.
The minister encouraged the UK to look into investing in areas of transport, manufacturing, energy, financial institutions, and infrastructure and participate in the open and transparent privatisation transactions. He especially highlighted PIA and PSM as the two public entities in need of revival for profit-making.