The caretaker government is finalizing plans for the upcoming elected government to sell Pakistan International Airlines (PIA), Reuters reported on Friday.
Privatization Minister Fawad Hasan Fawad told Reuters that 98 percent of the work on the PIA sale was completed. Fawad explained that the plan, developed by UK firm Ernst & Young, will be presented to the federal cabinet for approval before the caretaker term ends after next week’s election.
The cabinet will also determine whether to sell the stake through a public tender or a government-to-government transaction, the minister said.
Fawad noted that there is no turning back from the current path in getting rid of the national flag carrier’s debt-ridden profile.
The government-guaranteed legacy payables will be parked in a holding company under Ernst & Young’s privatization plan
The Privatization Minister said the government and the banks had agreed to settle the legacy debt, which included negative equity of Rs. 825 billion in loans, creditors’ money, and losses.
Earlier reports on the subject reveal the banks sought a five-year bond issued against the loan with a coupon of 16.5 percent, however, the finance ministry offered only 10 percent.
Meanwhile, PIA spokesman Abdullah Hafeez Khan said the airline was assisting the privatization process and fully cooperating with Ernst & Young (advisor).
To recall, elected governments have historically avoided implementing unpopular measures, such as selling the flag carrier. However, Pakistan, which is in a serious economic crisis, agreed in June to reform loss-making state-owned firms as part of a $3 billion bailout arrangement with the International Monetary Fund.