An almost heroic bid by Pakistan's caretaker government to lock in the partial privatisation of PIA - Pakistan International Airlines (PK, Islamabad International), ahead of the February 8, 2024, general election, risks being derailed by the country's election commission, which has formally asked that the government "refrain" from finalising the deal.

The February 1 letter, cited in a Reuters report, says, "the caretaker government should refrain from taking any further steps including the signing of an agreement in this regard till a decision is made by this commission." The agency also asked for copies of all cabinet documents related to the partial privatisation.

Caretaker Prime Minister Anwaar-ul-Haq Kakar and his administration pulled off the near impossible last week after reaching an agreement with PIA's local lenders for a ten-year debt rollover at 12% per annum. The seven domestic banks, owed PKR281 billion rupees (USD1.03 billion) in government-guaranteed debt and payables, had wanted 16%.

As a result of the agreement, the banks have agreed to provide no objection certificates to PIA's partial privatisation, which will involve the sale of 51% of the airline and its management rights to a foreign entity. The bank's debt and other liabilities will transfer to a holding company separate from the main PIA entity as part of the sale process.

On the weekend, the prime minister told local outlets that this transfer had happened. He said reversing or halting the partial privatisation process would now be extremely difficult.

There was widespread scepticism that the government would get all stakeholders onboard and activate the privatisation process before the election. While caretaker governments do not normally undertake significant reforms, the previous outgoing administration had empowered the interim government to continue with a program to wholly or partially privatise multiple state-owned enterprises, including PIA. A previously arranged USD3 billion International Monetary Fund bailout was contingent on these divestitures occurring.

"What we have done in just four months is what past governments have been trying to do for over a decade," Privatisation Minister Fawad Hasan Fawad said last week. "Our job is 98% done. The remaining 2% is to bring it on an Excel sheet after the cabinet approves it. There is no looking back."

Nawaz Sharif's Muslim League-Nawaz party is likely to win government. He and the presumptive Finance Minister, Ishaq Dar, have expressed support for divesting PIA and say they will "fast track" the process.

The local reporting on the Election Commission of Pakistan's letter is mixed, and it is unclear whether the agency has the power to bar the caretaker government from proceeding with PIA's partial privatisation, or merely request that it not. Their concerns stem from reforms made at the Federal Board of Revenue, which were necessary to facilitate the privatisation process. The commission argues any such changes should only be made by an elected government, not an interim one.