Islamabad, 27 August 2024 (TDI): On Monday, a commission within the National Assembly suggested that the government require the purchaser of Pakistan International Airlines (PIA) to maintain staff for a minimum of five years following the airline’s privatization.
Over the previous eight years, the airline has lost Rs. 500 billion.
The National Assembly Standing Committee on Privatization’s recommendation, however, runs counter to the comments made by potential purchasers. Over the past ten days, at least two bidders have stated at pre-bid conferences that they would rather sign new contracts with employees, indicating that buyers are reluctant to retain employees.
Additionally, some bidders stated that the federal government ought to bear all employee liabilities till the bid date.
Today (Tuesday), Deputy Prime Minister Ishaq Dar will preside over a meeting to finalize the government’s response to the bidders’ complaints about the draft shareholder agreement, subscription agreement, and share purchase agreement.
The standing committee, led by Muttahida Quami Movement (MQM) member Muhammad Farooq Sattar, suggested that PIA staff be kept on for a minimum of five years and that the airline’s union be included in the decision-making process.
Jawad Paul, the secretary of the Privatization Ministry, issued a warning, saying that the bid price would increase if the government insisted on long-term employee retention.
A three-year period after the completion date is proposed for the termination, layoff, retrenchment, or forced resignation of present employees, irrespective of their status, unless there is evidence of wrongdoing. But according to Paul, this suggestion is still preliminary.
Pre-bid conferences took place from August 15 to August 22. According to sources, during these meetings, potential purchasers recommended providing voluntary separation plans to staff members and keeping them on for a maximum of 12 months.
The buyer would have the choice to put such a plan into place, according to the privatization ministry secretary. All of PIA’s stakes, including management control, may be sold with authorization from the federal government ranging from 51 to 100 percent.
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There are now six selected parties, most of whom have expressed interest in acquiring 70% to 90% of the airline’s shares, and who are completing due diligence on the company.
The buyer is obligated by the draft sales purchase agreement to preserve all current employee benefits and facilities, including provident funds, benevolence funds, pensions, gratuities, and social welfare programs.
The workers will suffer if these are not completely supported and maintained. Paul explained that the holding company of PIA would pay pensions, and the buyer would pay serving personnel.
Paul further mentioned that since 2015, PIA has lost Rs499 billion, for a total of Rs842 billion in losses, of which Rs622 billion had been transferred to the holding company. The special audit of PIA’s financial statements, which was necessary prior to its privatization, is now being completed by the government till June 30.
With the hope that outstanding concerns will be resolved by then, the secretary of privatization said that PIA’s privatization bids will open on October 1st. Before, the airline was supposed to be privatized by the end of July, according to the government responsible for privatization.
According to the finance ministry, PIA claimed a loss of Rs75.7 billion for the fiscal year 2022–2023, ranking it as the fourth-highest government-owned entity that experiences losses.
For the sale of majority holdings in PIA, the government has offered buyer-friendly conditions, such as accepting partial purchase payments and permitting debt-funded investments over a three-year period.
According to those familiar with the draft agreements being finalized for the sale, the buyer will have the option to settle the remaining payments against PIA’s payables and pay around one-third of the overall transaction price in cash under the proposed terms.
The proposed agreements also call for a three- to five-year break in dividend payments to stockholders.
Also read: PIA Loses Rs 21.81 Bln Due To Aircraft Delayed
In response to the question of why no foreign entity shown interest in purchasing PIA, Paul stated that the government is unable to compel anybody to submit a bid. The government has not always had a good relationship with foreign investors, despite the fact that they are frequently regarded as superior managers.
Committee members suggested that the government prosecute people in charge of PIA’s enormous losses. MNA Sehar Kamran made a jesting remark, saying maybe it’s time to privatize government agencies as well.
