Airlines, mills, companies: Why Pakistan is selling majority stakes in state-owned firms

Inflation and declining foreign currency reserves have brought Pakistan to the verge of economic collapse. The nation’s debt has increased to an all-time high. The Islamic Republic is burdened with a mountain of unbearable debt.

According to media reports citing sources, the Pakistani government has decided to offer Qatar a 51% stake in Pakistan International Airlines (PIA) and the Roosevelt Hotel in New York while the prime minister is in Doha on a two-day official visit.

According to reports, as part of its support for the cash-strapped South Asian nation, the gas-rich Gulf state of Qatar plans to invest $3 billion from its sovereign wealth fund in Pakistan’s key economic sectors.

The main causes of Pakistan’s public debt explosion were lower-than-targeted tax collection, a sharp currency devaluation, higher interest rates, higher spending, losses suffered by state-owned companies, and debt mismanagement.

Let’s take a look at the various offers the Pakistani government has made to private companies to pay off its massive debt load.

Pakistan is to sell majority stakes in state-run airlines to Qatar 

According to media reports citing sources, the Pakistani government has decided to offer Qatar a 51% stake in both the Pakistan International Airlines (PIA) and the Roosevelt Hotel in New York. They added that after subtracting the liabilities, the government might receive at most $500 million to $600 million, which was politically challenging to present to the public as the best price.

Privatisation of Pakistan Steel Mill

On-site inspections of the Pakistan Steel Mill started on July 28. On July 27, the Privatization Commission (PC) announced that meetings with pre-qualified parties for the sale of Pakistan Steel Mills were underway. The companies also conducted on-site inspections and due diligence procedures. 

It was one of the largest companies on the list of active privatisation and had been causing the national exchequer significant losses since 2015.

Sale of Balloki and Haveli Bahadur Shah Power Plant

The Pakistan government has decided to sell the Balloki and Haveli Bahadur Shah power plants to a Gulf nation for $2 billion after failing to receive financial support from friendly nations (UAE).

The ordinance for the sale of the Balloki and Haveli Bahadur Shah power plants may be introduced after the National Assembly session.

According to sources, the total funding required to build both plants would be $2 billion when company shares are sold.

Not only the loss-making companies, the Pakistani government is selling profitable Pakistani company OGDCL to foreigners.

Pakistan’s cabinet has also approved the Inter-Governmental Commercial Transactions Ordinance, 2022 to bypass all procedures and abolish regulatory checks for the emergency sale of the state’s assets to foreign countries.

It will enable the government of Prime Minister Shehbaz Sharif to sell public property to foreign organisations and governments without restriction.

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