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Challenges and Uncertainties Surrounding PIA Privatization

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The National Privatization Commission goal of privatizing Pakistan International Airlines (PIA) by January next year has hit roadblocks, as revealed by insider sources.

Legal complexities and the hurdles in repaying PIA’s loans have halted progress in the privatization process. Despite the Caretaker Minister for Privatization, Fawad Hassan Fawad’s intentions to transition PIA to private ownership by January, the unresolved legal issues and financial constraints have dimmed the prospects of this initiative.

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With PIA encountering financial strains, the Finance Ministry faces a critical decision within the next three months to address the airline’s financial needs. Yet, reports indicate setbacks in the privatization efforts, postponing a final resolution on restructuring government loans for PIA.

Sources reveal PIA has amassed loans exceeding Rs. 270 billion from commercial banks, backed by government guarantees from the National Bank and Bank of Punjab. The airline’s capacity to fulfil loan repayments is restricted, with sources highlighting its inability to cover more than Rs. 8 billion in interest on an Rs. 260 billion loan.

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Amidst unfolding developments, the Finance Committee within the Treasury Department holds a pivotal role in determining PIA’s financial requirements. The intricate nature of PIA’s privatization raises doubts about the feasibility of the plan and the financial steadiness of the national carrier.



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