PIA privatisation enters final phase as bids are reviewed
Bidders submit sealed bids Tuesday morning.
Three bids were submitted Tuesday morning for a 75% stake in Pakistan International Airlines, with the next phase of the bid now starting at 4.30pm instead of 3.30 pm.
"The first phase of the bidding process has been completed; now the matter will go to the Privatisation Commission," said Privatisation Commission (PC) Chairman Muhammad Ali. The bids came from pre-certified bidders Lucky Cement, private airline Airblue and investment firm Arif Habib. Fauji Fertiliser and other bidders have pulled out of the auction.
The PC board will review and determine the reference price (the minimum price of sale), the exact figure of which remains confidential. Ali said that once the reference price is approved by the board, it will be forwarded to the Cabinet Committee for final approval.
PC Board Meeting in progress: the Privatisation Commission Board is underway for determination of the reference prices a key step supporting a structured, transparent process.
https://t.co/84NmfWfgZb#PrivatisationCommission #Transparency #Governance #Privatisation #Pakistan pic.twitter.com/FFOx2YAUQWAfter the Cabinet Committee’s approval, the federal cabinet will ratify the reference price.
Chairman of Privatisation Commission, Muhammad Ali, has just shared a major update on the sale of PIA. The bidding process is entering its final hours!#PIA #Privatisation #Pakistan #Aviation #BusinessNews pic.twitter.com/lh1fuObsHQ
If the bids exceed the reserve price, an open auction will take place; otherwise, the highest bidder will be allowed to match the price.
Once the successful bidder is identified, the bidder will have 90 days to purchase the remaining 25% of shares. The government had taken responsibility for PIA's liabilities of Rs 654 billion last year. New investors are required to commit an investment of Rs80 billion over the next five years, and of the proceeds from the sale of 75% of PIA’s shares, 92.5% will be allocated to the airline for reinvestment, while the remaining 7.5% will be transferred to the government.
The government claims that this privatisation is crucial for the airline's financial health and profitability. "No major privatisation of a national asset has taken place in the last 20 years, making this move historic for Pakistan," Ali said.
Additionally, the PC has stated that employee job security will be guaranteed for one year. The holding company will be responsible for managing pension plans and post-retirement benefits.
PIA has been a target for privatisation by previous governments. The airline has struggled with mounting debts, outdated fleets, and an inability to keep pace with the competition.