Pakistan’s Election Commission Halts PIA Privatization Ahead of General Elections
In a surprising turn of events, Pakistan’s ambitious effort to initiate the partial privatization of Pakistan International Airlines (PIA) has hit a significant roadblock. The country’s Election Commission has intervened, urging the caretaker government to pause its plans to privatize the national carrier. This move comes as the government aimed to finalize the deal before the upcoming general elections on February 8, 2024, signaling a potential derailment of the privatization process that was in its final stages.
The intervention was highlighted in a letter from the Election Commission, dated February 1, as reported by Reuters, instructing the caretaker government to halt any further actions, including the signing of any agreements related to PIA’s partial privatization, until the commission makes a final decision. The Election Commission has also requested copies of all cabinet documents pertaining to the privatization deal, indicating a thorough review process ahead.
This development follows a significant agreement reached by Caretaker Prime Minister Anwaar-ul-Haq Kakar’s administration with local lenders for a ten-year rollover of PIA’s debt at a reduced interest rate, paving the way for the privatization. The agreement, which was seen as a pivotal step towards the airline’s financial stabilization, involved the sale of 51% of PIA and its management rights to a foreign entity, alongside the transfer of the airline’s debt to a separate holding company.
The prime minister’s assertion over the weekend that reversing the privatization process would now be “extremely difficult” underscores the advanced stage of the negotiations and the potential complications arising from the Election Commission’s directive.
The caretaker government’s push for privatization was part of a broader initiative to comply with conditions set by the International Monetary Fund (IMF) for a bailout package, emphasizing the privatization of multiple state-owned enterprises, including PIA. Privatization Minister Fawad Hasan Fawad’s statement last week highlighted the urgency and determination of the caretaker government to complete the privatization process, a task that has eluded past administrations for over a decade.
The potential change in government, with Nawaz Sharif’s Muslim League-Nawaz party expected to win the upcoming elections, brings additional layers of complexity to the privatization narrative. Both Sharif and the presumptive Finance Minister, Ishaq Dar, have expressed support for divesting PIA, promising to “fast track” the process, which may align with or conflict with the Election Commission’s current stance.
The Election Commission’s intervention raises questions about the balance of power between the caretaker government and the commission, particularly regarding significant financial and operational reforms such as the privatization of a national asset like PIA. The commission’s concerns about making such critical decisions in the interim period reflect the ongoing debate over governance and decision-making authority in the run-up to the elections.
As the situation unfolds, the fate of PIA’s partial privatization hangs in the balance, with potential implications for Pakistan’s aviation sector, its economic reform agenda, and the broader context of governance and regulatory oversight in transitional government periods.