Business magnates, local airlines show interest in PIA

Local real estate magnates, domestic airlines and industrialists have shown interest in acquiring the ailing Pakistan International Airlines (PIA) while no foreign company has submitted documents for prequalification as a lead consortium.

The Ministry of Privatisation on Friday announced that in response to the Request for Proposals, eight consortia submitted papers till the expiry of the deadline on Friday evening.

The government had given a two-week extension for filing papers in the hope that at least three international bidders would come forward. But no new party emerged despite the extension.

Two weeks ago, Privatisation Minister Abdul Aleem Khan claimed that 10 prospective investors had submitted Expressions of Interest (EOI) for the privatisation of PIA. However, the ministry on Friday announced that only eight parties submitted documents.

The privatisation ministry has released a partial list of parties. It only gave the lead consortium names but did not disclose the names of members of the consortia. Prime Minister Shehbaz Sharif has instructed to ensure full transparency in the privatisation programme.

The development came amid the International Monetary Fund (IMF)’s focus on privatisation of Pakistan’s bleeding power sector. Pakistani authorities have briefed the lender about the short to medium-term privatisation programme.

During meetings, according to sources, the IMF has clearly said that the privatisation of power distribution companies will be the policy action that it will seriously pursue during the next loan programme.

But before sell-off, the National Electric Power Regulatory Authority (Nepra) and the federal government will have to make decisions on multi-year tariff adjustments and uniform tariff regimes. The uniform tariff policy has caused more inefficiency.

The government wants to sell 51% to 100% stake in PIA to the private sector aimed at offloading losses of the airline. But foreign investors cannot acquire more than 49% shares and if they want to invest more they will have to make a consortium with local investors.

The government has already cleared the balance sheet of PIA and parked its debt in a holding company. It also took responsibility of the PIA debt taken from commerciala banks.

Details released by the Ministry of Privatisation showed that no foreign company or international airline emerged as the lead consortium, indicating their minimal interest.

The Privatisation Commission had hired a financial adviser at a hefty fee to undertake the transaction.

The privatisation ministry said that in response to the invitation for EOI, it received the Statement of Qualification from eight bidders.

Among the interested parties are Fly Jinnah and Airblue – the two prominent players of the aviation industry.

Pakistan’s business mogul Arif Habib Corporation has also shown interest. Sardar Ashraf D Baluch Construction Company and Shanxi Construction Engineering Group Co Ltd (China) have submitted the Statement of Qualification as one consortium. Gerry’s International is another contender.

Younus Brothers and the Lucky Group are also in the race. Another consortium is led by Pak Ethanol. Real estate player Blue World City has also shown interest, according to the privatisation ministry.

The Privatisation Commission will now carry out the pre-qualification process in line with the criteria laid down in the Request for Statement of Qualification. Only pre-qualified parties will be invited for the next stage of bidding, said the ministry.

Any party with a minimum net worth of Rs30 billion was eligible to submit documents. This opened avenues for the richest Pakistani families to take interest in the airline. There are no stringent conditions related to the aviation industry experience.

Published in The Express Tribune, May 18^th, 2024.

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