In a bold move to invigorate Pakistan’s economy, the government has announced a comprehensive plan to privatize 10 state-owned enterprises (SOEs) within the current fiscal year. The targeted sectors include aviation, banking, and power, with significant changes expected in ownership and management structures.
Key Highlights of the Privatization Plan:
1. Aviation Sector:
The government aims to transfer ownership of a leading bank to the UAE through a government-to-government (G2G) deal within this year. Minister for Privatization, Abdul Aleem Khan, along with key officials, discussed the five-year privatization roadmap, extending from 2024 to 2029, during a recent media briefing.
2. Pakistan International Airlines (PIA):
Khan emphasized the potential profitability of PIA, stressing the need for new investment and acknowledging the skill of PIA’s pilots. Despite past delays costing billions, the privatization process is now progressing, with half a dozen prequalified bidders conducting due diligence. Final bids are expected in August 2024.
3. Addressing Concerns:
Concerns regarding the European Union Aviation Safety Agency (EASA) ban on PIA’s European routes are being addressed in ongoing discussions with bidders. Detailed expert sessions are being held to provide bidders with a clear understanding of the entity’s potential.
4. Phased Privatization Approach:
The privatization strategy is divided into three phases. Phase I (0-1 year), Phase II (1-3 years), and Phase III (3-5 years) will address employee concerns, property issues, legislative changes, and liabilities to ensure a smooth transition.
5. Comprehensive Privatization List:
Currently, 24 entities are ready for privatization, with an additional 41 entities under review by the Cabinet Committee on State-Owned Enterprises (CCoSOEs). These non-strategic SOEs will likely be included in the program, highlighting the government’s commitment to reducing its commercial enterprise footprint.
6. High-Profile Transactions:
Among the significant transactions is the Roosevelt Hotel in New York. The Privatization Commission has hired Jones Lang Lasalle Americas Inc. (JLL) to explore options including long-term leases, outright sales, or joint ventures. The final decision will be made after the Cabinet Committee on Privatization (CCoP) reviews the due diligence report.
7. House Building Finance Company Limited (HBFCL):
The sale of HBFCL to Pakistan Mortgage Refinance Company was approved by the federal cabinet in July 2023, with the transaction expected to complete by July 2024.
8. First Women Bank Limited (FWBL):
FWBL’s privatization is being pursued through a G2G agreement following interest from the UAE. Preliminary due diligence is complete, and the process awaits the identification of a suitable UAE state-run company.
9. Future Privatizations:
Other entities slated for privatization within the next year include Zarai Taraqiati Bank Limited (ZTBL), Pakistan Engineering Company Limited (PECO), and several power companies. Phase II and III will see further privatizations, including insurance companies and additional power generation firms.
10. Power Sector Reforms:
The government is considering privatizing efficient power plants from GENCOs and exploring options for Distribution Companies (Discos), including long-term concessions. This restructuring aims to enhance efficiency and attract investment.
By executing this ambitious plan, the government aims to foster economic growth, reduce state involvement in commercial enterprises, and improve overall efficiency.
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