Ahead of elections next week, Pakistan's caretaker administration is making binding plans for a new government to sell loss-making Pakistan International Airlines (PIAa.PSX), opens new tab, according to the minister in charge of the process and other officials.
In the past, elected governments have shied away from undertaking unpopular reforms, including the sale of the flag carrier. But Pakistan, in deep economic crisis, agreed in June to overhaul loss-making state-owned enterprises under a deal with the International Monetary Fund (IMF) for a $3 billion bailout, Reuters reported.
The government decided to privatise PIA just weeks after signing the IMF agreement.
The caretaker administration, which took office in August to oversee the Feb. 8 election, was empowered by the outgoing parliament to take any steps needed to meet the budgetary targets agreed with the IMF.
"Our job is 98% done," Privatisation Minister Fawad Hasan Fawad told Reuters when asked about the plan to sell the airline. "The remaining 2% is just to bring it on an excel sheet after the cabinet approves it."
Fawad said the plan, drawn up by transaction adviser Ernst & Young, will be presented to the cabinet for approval before the tenure of the administration ends following the election. The cabinet will also decide whether to sell the stake by tender or through a government-to-government deal, Fawad said.
"What we have done in just four months is what past governments have been trying to do for over a decade," Fawad said. "There is no looking back."
Details of the privatisation process have not been previously reported.
PIA had liabilities of 785 billion Pakistani rupees ($2.81 billion) and accumulated losses of 713 billion rupees as of June last year. Its CEO has said losses in 2023 were likely to be 112 billion rupees.
Progress on the privatisation will be a key issue if the incoming government goes back to the IMF once the current bailout programme expires in March. Caretaker Finance Minister Shamshad Akhtar told reporters last year that Pakistan would have to remain in IMF programmes after the expiry.
Two sources close to the process told Reuters that a 51% stake with full management control would be offered to buyers after parking the airline's debts in a separate entity, under the 1,100 page report from Ernst & Young.
Reuters could not independently confirm the contents of the report. Fawad did not give specific details of the size of the stake to be sold, but confirmed the plan involved the carrier's debts being spun off into a separate entity.
Ernst & Young did not respond to requests for comment.
PIA spokesman Abdullah Hafeez Khan said the airline was assisting the privatisation process, extending "full cooperation" to the transaction adviser.
Israeli strikes on Iranian facilities, including missile factories and air defenses, have reduced Tehran’s conventional military capabilities, Sullivan told CNN.
The Biden administration is concerned that a weakened Iran could build a nuclear weapon, White House National Security Adviser Jake Sullivan said on Sunday, adding that he was briefing President-elect Donald Trump's team on the risk, Reuters reported.
Iran has suffered setbacks to its regional influence after Israel's assaults on its allies, Palestinian Hamas and Lebanon's Hezbollah, followed by the fall of Iran-aligned Syrian President Bashar al-Assad.
Israeli strikes on Iranian facilities, including missile factories and air defenses, have reduced Tehran's conventional military capabilities, Sullivan told CNN.
"It's no wonder there are voices (in Iran) saying, 'Hey, maybe we need to go for a nuclear weapon right now ... Maybe we have to revisit our nuclear doctrine'," Sullivan said.
Iran says its nuclear program is peaceful, but it has expanded uranium enrichment since Trump, in his 2017-2021 presidential term, pulled out of a deal between Tehran and world powers that put restrictions on Iran's nuclear activity in exchange for sanctions relief, read the report.
Sullivan said that there was a risk that Iran might abandon its promise not to build nuclear weapons.
"It's a risk we are trying to be vigilant about now. It's a risk that I'm personally briefing the incoming team on," Sullivan said, adding that he had also consulted with U.S. ally Israel.
Trump, who takes office on Jan. 20, could return to his hardline Iran policy by stepping up sanctions on Iran's oil industry.
Sullivan said Trump would have an opportunity to pursue diplomacy with Tehran, given Iran's "weakened state."
"Maybe he can come around this time, with the situation Iran finds itself in, and actually deliver a nuclear deal that curbs Iran's nuclear ambitions for the long term," he said.
Earlier this week, U.S. Deputy National Security Adviser Jon Finer said Pakistan’s development of long-range ballistic missiles made it an “emerging threat”.
Pakistan's Foreign Ministry on Saturday dismissed as unfounded and "devoid of rationality" assertions by a senior U.S. official that its missile programme could eventually pose a threat to the United States, Reuters reported.
Earlier this week, U.S. Deputy National Security Adviser Jon Finer said Pakistan's development of long-range ballistic missiles made it an "emerging threat".
Finer's comments, which came a day after Washington announced a new round of sanctions related to the ballistic missile programme, underscored the deterioration in once-close ties between Washington and Islamabad since the 2021 U.S. troop withdrawal from Afghanistan.
Addressing Finer's remarks, Pakistan's Foreign Ministry said the perception of an alleged threat was "unfortunate".
"These allegations are unfounded, devoid of rationality and sense of history," the ministry added in a statement.
The ministry said its strategic capabilities were solely for defending its sovereignty and maintaining regional stability, and should not be perceived as a threat to any other country.
It also highlighted Pakistan's long history of cooperation with the U.S., particularly in counter-terrorism efforts, and reiterated its commitment to engaging constructively on all issues, including regional security and stability, read the report.
Relations between the United States and Pakistan have seen significant ups and downs. The countries collaborated during the Cold War and in the fight against al Qaeda after 9/11.
However, ties have been strained due to coups in the South Asian country by Pakistan's military, support for the Taliban's 1996-2001 rule in Afghanistan, and over the nuclear weapons programme.
Sixteen security personnel were killed in northwest Pakistan in an attack by militants, Reuters reported citing the deputy superintendent of police.
"According to our information, 16 security personnel were martyred and eight injured in this attack. A search operation is under way in the area," said Hidayat Ullah, deputy superintendent of police in South Waziristan.
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