Tuesday 26 / November / 2024
Islamabad: Ahead of the general elections, the Special Investment Facilitation Council (SIFC) of Pakistan on Friday gave the approval for the division of the Pakistan International Airlines (PIA) into two different entities. However, the unpaid liabilities of the company will be parked in the upcoming holding company, Pakistan-based The News International reported.
This financial decision was approved by the Pakistani authorities, without any ascertaining valuation by the financial consultant, the report said. Pakistan's caretaker federal cabinet is set to approve the model of transaction for selling out core operation of the PIA next week.
The commercial banks have also agreed for the conversion of debt of PKR 268 billion into Islamic instruments with a rate of 12 per cent and with a maturity of ten years at a floating rate of interest. The outstanding amount will be settled through proceeds, privatization of the PIA, and amounts to be settled through budgetary allocations,
Pakistan's Caretaker Minister for Finance Shamshad Akhtar during the process had raised various queries over over the lack of valuation done by the financial consultant, The News International reported citing official sources.
According to the report, when written questions were sent to the Pakistan's Caretaker Minister for Privatisation Fawad Hasan Fawad. He responded by saying that "the SIFC has endorsed the bi-furcation of the PIA into two entities as proposed by the financial advisor".
He further added that the SIFC had given approval to the valuation methodology of the PIA which is in line with best international practices and guidelines. He stated that the valuation methodology is determined on the basis of weighted average to arrive at the valuation of PIA, The News International report.
He stressed that this formula has been presented before the SIFC and they approved it. The caretaker federal cabinet's approval will be sought for the whole segregation plan, valuation methodology, including transaction structure, one plus five-year business plan, and how much investment is expected from potential buyers and how much loans will be retained.
Fawad Hasan Fawad said that the government will not take outstanding liabilities on its books. However, all these liabilities will be move to holding company and these liabilities will be given clearance with the sale of assets in due course.
Fawad said, "The Privatisation Commission welcomes potential investors and facilitates them in terms of sharing information but we want that this transaction should be handed off. The financial advisor should do knocking and data sharing."
After fair valuation, the federal cabinet's approval will again be sought. He noted that it was not an easy task to structure such transactions as they secured solutions to banks' outstanding loans, settling international creditors, and now turning into transactions on which they would proceed further, according to The News International report.
The SIFC also gave approval to the restructuring plan of the FBR, for which the Election Commission of Pakistan has already asked the caretaker government to leave its implementation up to the elected government coming into power after the polls set to take place on February 8. (ANI)
