PIA sale deal set for April financial close

Committee told 75% shares sold while liabilities shifted to holding company

ISLAMABAD:

The Senate Standing Committee on Privatisation was informed that the agreement for the privatisation of Pakistan International Airlines (PIA) was finalised on January 29 and the financial close of the transaction is expected by the end of April.

Officials told the committee that steering and working committees were currently finalising proposals related to the transaction. After completion of the privatisation process, PIA has been converted into an equity company and related matters under the agreement are expected to be completed by April.

Privatisation Commission Secretary Usman Bajwa told the committee that without privatisation the national airline would have continued to incur losses of around Rs100 billion annually. He said that PIA accumulated losses of approximately Rs500 billion between 2015 and 2023, adding that management problems remained the airline's biggest challenge during this period.

Officials further informed the committee that 75% of PIA's shares have already been sold under the transaction, while the remaining 25% stake will be sold at a later stage. Around Rs650 billion in liabilities have been transferred to a holding company established for this purpose, while Rs180 billion in payables have been shifted to the new buyer as part of the restructuring arrangement.

The committee was also told that properties under the PIA Holding Company are valued at approximately Rs12 billion.

Officials said an Arif Habib-led consortium that acquired the majority stake in the airline is currently searching for a new management team and a chief executive officer to run the airline after the privatisation process is completed. The committee was also informed that Fauji Fertiliser Company will be included in the consortium after receiving cabinet approval.

During the meeting, the committee reviewed matters related to medical facilities for PIA employees and pensioners. Officials informed members that the airline has about 16,500 pensioners while more than 26,000 individuals benefit from medical facilities provided by the organisation.

A fund of Rs450 million has been created to meet employees' medical expenses prior to privatisation. Officials added that 10,080 employees are currently covered under the State Life Insurance medical insurance scheme.

Committee Chairman Senator Afnanullah Khan directed authorities to address complaints raised by retired employees and ensure that adequate medical facilities are provided to them.

The committee also reviewed the affairs of the Pakistan Mineral Development Corporation (PMDC). Officials told members that the corporation earns around Rs1 billion annually from Balochistan.

However, Senator Anwaarul Haq Kakar remarked that mining contractors operating in the province earn more than the corporation itself.

Committee members described PMDC's income as relatively low and directed the organisation to improve its operational performance. They also ordered a review of lease agreements with private companies, noting that the rents being charged were significantly below prevailing market rates.

Officials said PMDC holds extensive mineral reserves across the country, including coal, salt and soapstone deposits spread over tens of thousands of acres. Mineral exploration licences are issued for a period of three years, while mining land in Balochistan is leased to private operators for 30 years.

The committee also discussed the potential of Gwadar International Airport, with the chairman stating that its proximity to the Middle East and Central Asia could help attract regional air traffic.