ISLAMABAD: The Privatisation Commission board on Tuesday greenlit a second attempt to privatise Pakistan International Airlines (PIA), proposing to sell between 51% and 100% of the struggling airline’s shares while leaving room for partial government retention.
Led by Muhammad Ali, the newly appointed Advisor to the Prime Minister on Privatisation, the board recommended offloading a majority to full stake along with management control to the Cabinet Committee on Privatisation (CCOP). This follows a failed earlier bid where investors shied away due to excessive government influence, according to a press release.
The decision came hot on the heels of Prime Minister Shehbaz Sharif’s frustration over delays in downsizing government operations, expressed during a Monday briefing by the Cabinet Committee on Rightsizing. Sources noted the PM urged faster action, aligning with Pakistan’s IMF pledge to privatise PIA by July. “Investors will be offered 51% to 100% shares, with the final figure to be set after talks with them,” Ali explained.
The bidding process will shape the deal’s terms, to be detailed in documents for CCOP approval. The commission previously told the IMF that three bidders might join, including two who backed out last time over unresolved issues like an 18% sales tax on aircraft leases and Rs45 billion in liabilities. A third, unexpected contender with no aviation background but significant clout could shake things up, sources hinted. The IMF’s December concessions on these sticking points, plus reopened European routes, are seen as boosts for this round.
Last time, the government aimed for a 60% sale but faltered when bidders demanded 80%-100% control to sidestep government meddling. A real estate developer’s lone Rs10 billion offer—far below the Rs85 billion floor—tanked the process, costing Rs1.2 billion in fees to advisor Ernst & Young. Despite criticism from ex-Privatisation Minister Abdul Aleem Khan, the firm remains on board.
The commission is now testing market interest ahead of an Expression of Interest (EOI) planned for late March, though delays loom. Shortlisting and due diligence are slated for April to June.
Meanwhile, the board also weighed options for privatising New York’s Roosevelt Hotel Corporation. After last week’s CCOP directive for competitive bidding, it opted for a financial advisor briefing before deciding between a full sale or partnership. Last August, the board leaned toward government-to-government talks with options like an outright sale, joint venture, or 99-year lease, clashing with the advisor’s joint venture preference for maximum returns. A final plan awaits CCOP approval.
