PIA goes under hammer on June 3
PHOTO: FILE
The Pakistan State Oil (PSO) has given its consent to the divestment of the Pakistan International Airlines (PIA), paving the way for the bidding round on June 3, 2024, as per the request of the federal government to proceed ahead with the privatisation of the national flag carrier.
PIA owed Rs27 billion to the PSO for the fuel supplied for its commercial operations. Sources confirmed to The Express Tribune that PSO had indeed granted its consent in this matter, allowing the federal government to take the PTI privatisation process to the bidding level.
Amidst concerns expressed by foreign investors regarding political stability and the ease-of-doing business in Pakistan, the government had set a June 3, 2024, deadline for conducting the bidding for the privatisation of the airlines.
In a recent cabinet meeting, it was noted that there were primarily two concerns for the investors considering business ventures in Pakistan. One was the concern for political stability, which had been addressed after the elections and the establishment of a new elected government.
Regarding the second concern, it was noted that the economic and financial position had improved with the continuation of the International Monetary Fund (IMF) programme.
Consequently, a cabinet committee was established on outsourcing airport management and privatisation of the PIA.
The minister for defense and aviation was made the convener of the committee, along with other members, including the privatisation and foreign ministers, the Planning Commission deputy chairman, and the aviation and Privatization Commission (PC) secretaries.
Meanwhile, the Aviation Division reported that after the approval of a new holding company on February 6, to implement the Scheme of Arrangement (SOA), the federal cabinet waived the fee for the authorised capital in accordance with the Companies Act, 2017.
To execute this decision, the Aviation Division approached the Securities and Exchange Commission of Pakistan (SECP) for guidance on the incorporation of the holding company. The SECP advised that the incorporation of the holding company would require cabinet approval.
Simultaneously, the Law Division completed the vetting of the draft Memorandum of Association (MCA) and the Articles of Association (AOA) sent by the PC. The provisions of the MoA and the AoA were incorporated into the holding company on suggestions from the Finance Division.
The name of the holding company is PIA Holding Company Limited (PIA HoldCo Ltd) – a public limited company owned and controlled by the federal government. The primary business of the PIA HoldCo is to succeed specific assets, liabilities, and subsidiaries of the PIA Corporation Ltd (PIACL).
The authorised capital of the PIA HoldCo will be Rs53.5 billion, divided into 5,349,250,000 Class A shares of Rs10 each and 1,500,000 Class B shares of Rs5 each. The fee for the authorized capital would be waived. The paid-up capital of the company will be Rs10,000 only.
The initial subscribers of PIA HoldCo Ltd would include the Aviation Division secretary, the Finance Division secretary, and the the Privatisation Division secretary. These initial subscribers will also serve as the first directors of PIA HoldCo Ltd until regular directors are appointed.
The Chief Executive Officer (CEO) of the PIACL would also serve as the CEO of the PIA HoldCo until a regular CEO was appointed. These details regarding the incorporation of the holding company and the exemption of fees would be published in the official gazette.