NEW LAW ALLOWS PIA TO BECOME A PLC

The Pakistani parliament have adopted a law which will see the country’s cash strapped national airline company become a PLC and at the same time ban the government from relinquishing management control. The government has promised that no action will be taken against those employees who led a charge during the protests against privatisation, and the opposition remained adamant on this demand during a joint parliamentary session. The law which blocked the selling of the majority share in PIA, Pakistan International Airlines, was a huge setback for the Prime Minister Nawaz Sharif. The government has been struggling to meet the deadline IMF set on selling PIA, which now carries accumulated losses of over $3bn following several months delay in the amendment of the 1956 law which banned it from being a privately owned company. Factors including corruption, nepotism, flawed measures in the short term and a poor quality of service have all contributed to the decline of the airline. Following months of legal wrangles between representatives of both the government and the opposition, a joint parliament session saw the unanimous passing of the bill that blocked the airline being sold.

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The law reads that “the company’s management control, and that of any subsidiary companies, will continue to be vested in the majority shareholders which will remain as the federal government whose share shall not fall below 51%. Mohammad Zubair is the chairman of the Privatisation Committee, as well as being a member of the Sharif ruling party, and he said that the government would indeed continue to be the major shareholder. He also said that they were in agreement with the opposition parties that PIA wouldn’t be privatised and it’s conversion to a private entity is only to ensure that it is run more efficiently. He added that this bill was merely a compromise due to the resistance from opposition parties and unions being so strong, and the government would now be raising the money to offset those losses that would arise from selling the limited company’s minority shares. One analyst has said, however, that it’s unlikely to attract many investors unless improving PIA’s corporate governance became a priority in both letter and spirit.

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