Monitoring Desk
ISLAMABAD: The government has officially deferred the privatization of Pakistan International Airlines (PIA) to the second phase, shifting its immediate focus to the sale of power distribution companies (Discos) despite concerns over preparedness and financial viability.
The decision was conveyed to a delegation of World Bank executive directors currently visiting Pakistan to assess the country’s economic reforms, including its privatization agenda. The discussions align with the recently finalized Country Framework Programme (CPF), under which Pakistan is set to receive an indicative assistance package of $20 billion. To ensure a smooth rollout, both sides have agreed to hold joint implementation workshops.
Minister for Economic Affairs Ahad Khan Cheema informed the delegation that the government remains committed to restructuring state-owned enterprises (SOEs) and intends to privatize them in a phased manner. “The first phase prioritizes the privatization of Discos, while PIA and other SOEs will be addressed in the second phase,” he stated.
The shift in strategy follows the government’s failed attempt to sell PIA, which ended in a setback. Authorities are now working to revamp their approach before making another privatization attempt for the national flag carrier.
World Bank Raises Concerns Over Discos’ Privatization
The visiting World Bank delegation, comprising five executive directors and four alternate executive directors, expressed concerns about the government’s plan to privatize Discos. They questioned whether circular debt, inefficient infrastructure, and governance challenges could undermine the success of the process.
The delegation also sought clarity on the broader SOE privatization framework, particularly regarding fiscal risks posed by loss-making state enterprises.
Cheema assured them that Pakistan plans to privatize up to 50 SOEs over the next three to four years. He emphasized that while about one-third of SOEs are strategic assets, the remaining entities will be divested to improve efficiency and reduce financial strain on public resources.
Power Sector Challenges and Circular Debt Crisis
Addressing the crippling circular debt, Cheema acknowledged that high electricity tariffs and technical losses had made energy unaffordable for many consumers. He noted that rising investments in renewable energy and efficiency improvements in distribution would help mitigate the crisis.
“The circular debt is gradually declining, and we are actively working toward achieving full cost recovery in the power sector,” the minister assured the delegation. He further highlighted that Pakistan’s energy strategy now prioritizes renewable expansion and reducing line losses to enhance financial sustainability.
Strengthening Economic Ties with the World Bank
Cheema welcomed the third World Bank delegation visit in a short span, describing it as a reflection of the bank’s trust in Pakistan’s economic reform agenda.
The World Bank representatives emphasized that their visit aimed to gain a deeper understanding of Pakistan’s economic, political, and governance landscape, while identifying potential areas for future development support under the CPF 2026-2035.
Digitalization and Social Sector Reforms
Highlighting the government’s digital transformation drive, Cheema informed the delegation that Pakistan had completed a comprehensive review of global digitalization models and was now moving toward end-to-end automation of government institutions.
On social reforms, he pointed to youth employment and women’s empowerment initiatives, emphasizing that technical training programs were being expanded through adequate budgetary allocations.
As Pakistan pushes ahead with its ambitious privatization plan, the success of its power sector divestment will serve as a critical test of the government’s economic management and its ability to restore investor confidence.
