Privatization of state-owned PIA will be live broadcast on December 23, 2025
The Privatisation
Commission is set to open bids for the privatization of Pakistan International Airlines
Corporation Ltd (PIAC) on December 23, with three bidders still in
contention following the withdrawal of Fauji
Fertiliser Company Ltd.
According to the schedule circulated on Sunday,
bids will be submitted between 10:45am and 11:15am, while the opening is
scheduled for 3:30pm. The government has decided to televise the bid-opening
process live.
The remaining bidders include two consortia and
one airline:
·
A consortium led by Lucky
Cement Limited, with Hub Power Holdings Limited, Kohat Cement Company Limited
and Metro Ventures (Private) Limited;
·
A consortium comprising
Arif Habib Corporation Limited, Fatima Fertiliser Company Limited, City Schools
(Private) Limited and Lake City Holdings (Private) Limited; and
·
Air Blue (Private) Ltd.
Privatisation Commission Chairman and Adviser
to the Prime Minister on Privatisation Muhammad Ali confirmed in a YouTube
interview that Fauji Fertiliser Company had exited the process.
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He explained that sealed bids would be placed in a transparent box after submission, following which the Privatisation Commission board would meet to determine a reference price. The Cabinet Committee on Privatisation (CCoP) will then approve the reference price, which will be announced at the time of bid opening.
If bids exceed the reference price, an open
auction will be held. If they fall below it, priority will be given to the
highest bidder.
Mr Ali said the federal cabinet is expected to
approve the transaction within days, after which formal agreements will be
signed. The commission will then have up to 90 days to complete procedural
requirements, including the transfer of assets, liabilities and leased
aircraft.
Transaction structure
Under the transaction framework, bidders are
competing for a 75 per cent stake in PIA. Of the proceeds from this stake, 92.5
per cent will go to PIA, while 7.5 per cent will be transferred to the national
exchequer.
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The government will retain the remaining 25 per cent shareholding, though the successful bidder will have the option to acquire it later or leave it with the state. Valuation of this stake will take place after the 75 per cent transaction, with bidders allowed up to 12 months to purchase it at a 12 per cent premium. A decision on the remaining stake must be made within 90 days.
Mr Ali said the government rejected bidders’
request to spread payments for the 75 per cent stake over one year, arguing
that such an arrangement would unfairly shift risk to the state. Under the
agreed terms, two-thirds of the bid amount must be deposited within 90 days,
with the remaining one-third payable within a year.
Outlook and impact
Highlighting the broader economic impact, Mr
Ali said a revival of PIA would contribute to GDP growth. Pakistan’s aviation
sector currently contributes just 1.3 per cent to GDP, compared with 18 per
cent in the UAE and 8.5 per cent in Saudi Arabia, despite significant
potential.
Of PIA’s 34 aircraft, only 18 are operational.
The airline holds air service agreements with 97 countries and landing rights
in more than 170. It currently reports a net profit of Rs11 billion and equity
of Rs30bn, while liabilities of Rs26bn will remain with PIA and be paid by the
bidder over five years.
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On employment, he said no employee could be laid off for one year under the proposed agreement. Employees’ pensions and benefits are fully protected, with pension liabilities of retired staff to be borne by the holding company. PIA’s workforce has already declined from 11,500 in 2011 to about 6,500.
Mr
Ali said PIA could either continue to drain public funds or become a highly
profitable enterprise if managed efficiently. With a population of 250 million,
established routes and valuable landing slots, he argued, the airline needs
fresh investment, fleet expansion and private-sector decision-making to return
to its former standing.
Source: Dawn