ISLAMABAD: The Privatisation Commission is all set to proceed with the privatization of Pakistan International Airlines Corporation Ltd (PIAC) on December 23, with only three bidders remaining in the race following the withdrawal of Fauji Fertilizer Company Ltd, officials said on Sunday. According to the privatization programme, sealed bids for a 75 per cent stake in the national flag carrier will be submitted between 10:45am and 11:15am and opened at 3:30pm in a process to be broadcast live on television to ensure transparency.
The remaining bidders include a consortium led by Lucky Cement Limited along with Hub Power Holdings Limited, Kohat Cement Company Limited and Metro Ventures (Private) Limited; another 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.
Chairman of the Privatization Commission and Adviser to the Prime Minister on Privatization, Muhammad Ali, confirmed in a YouTube interview that Fauji Fertilizer Company had exited the bidding process, adding that after the submission of bids, they would be placed in a sealed transparent box before the commission’s board meets to determine the reference price. The price will then be presented to the Cabinet Committee on Privatization (CCoP) for approval and announced at the time of bid opening. He explained that bids exceeding the reference price would lead to an open auction, while in the event of lower bids, the highest offer would be given priority.
Under the transaction structure, the bidding is for a 75pc stake in PIA, of which 92.5pc of the proceeds will go directly to the airline, while only 7.5pc will be transferred to the national exchequer. The government will retain the remaining 25pc shareholding, which the successful bidder may choose to acquire within 12 months at a 12pc premium or leave with the state. Mr Ali said the bidders would be required to decide on the purchase of the 75pc stake on Tuesday, while a decision on the remaining shares would need to be made within 90 days.
The adviser said the government had rejected a request by bidders to spread payments for the 75pc stake over one year, warning that such an arrangement could expose the state to financial risk. Instead, the winning bidder will be required to deposit two-thirds of the bid amount within 90 days and the remaining one-third within a year. He added that the federal cabinet would approve the transaction within days of the bid opening, followed by the signing of agreements, after which the Privatisation Commission would have 90 days to complete procedural requirements, including the transfer of assets, liabilities and leased aircraft.
Highlighting PIA’s financial and operational position, Mr Ali said the airline currently has a net profit of Rs11 billion and equity of Rs30bn, while liabilities amounting to Rs26bn will remain with PIA and be paid off over five years. Of the airline’s 34-aircraft fleet, only 18 aircraft are currently operational, despite PIA having air service agreements with 97 countries and landing rights in over 170 countries. He said no PIA employee would be laid off for at least one year under the privatization agreement, with pensions and post-retirement benefits fully protected.
Emphasizing the broader economic impact, Mr Ali said the aviation sector’s contribution to Pakistan’s GDP stands at just 1.3pc, compared to 18pc in the UAE and 8.5pc in Saudi Arabia, arguing that PIA’s revival under private management could significantly boost economic growth. PIA has enormous potential, but it requires investment, fleet expansion and efficient decision-making that only the private sector can provide, he said, adding that with proper management, the national carrier could return to its former glory.