ISLAMABAD - The government’s privatisation plan on Thursday faced blowback as the Pakistan International Airline (PIA) attracted only Rs10 billion from the sole bidder for a stake in the national carrier against the minimum expected price of Rs85 billion.
Only one — real estate development company Blue World City —participated in the bidding process, placing a bid at only Rs10 billion, which is far less than the government-set minimum price of Rs85 billion Pakistani rupees. The government had earlier shortlisted six companies. Of the six pre-qualified groups for the bid, five have withdrawn, leaving only one bidder. Among the shortlisted were private airline Airblue Ltd., Arif Habib Corporation Ltd., Fly Jinnah by Air Arabia, Y.B. Holdings Pvt., Pak Ethanol Pvt., and the real estate consortium Blue World City.
Federal Minister for Privatization Aleem Khan has not attended the ceremony. The Privatization Commission has the opened the bid and has asked the lone bidder to increase the bid, nearer to the government’s minimum price. However, the bidder (Blue World City) has refused by saying that minimum price is too high. Now, the Privatization Commission would inform the federal cabinet about details of the bidding. If it is rejected, the bidding process will be initiated anew. The other prequalified bidders had initially agreed to a 60 percent stake. But, later, they pushed for complete ownership of PIA, citing substantial risks associated with limited control. In response, the government raised the offer to a 76 percent stake, but the bidders expressed further concerns over the airline’s financial burdens, aged fleet, and operational challenges.
Cash-strapped Pakistan is looking to offload a 51-100% stake in debt-ridden PIA. PIA began to be unprofitable in 2011, requiring government subsidies. By the end of 2016, the national flag carrier was saddled with $3 billion in debt. At the end of 2018, the airline was burdened with $3.3 billion in debt, up from $2.97 billion the year before. Government bailouts were required for the carrier’s continued operation.
Earlier, the Cabinet Committee on Privatization (CCOP) Thursday endorsed the reference price as recommended by the PC Board for divestment of 60% shares of Pakistan International Airlines (PIACL) subject to terms and conditions of the bidding document.
Deputy Prime Minister and Foreign Minister Mohammad Ishaq Dar who is in Doha with Prime Minister Shehbaz Sharif, chaired the meeting of Cabinet Committee on Privatization (CCOP) via zoom. Ministers of Finance, Privatization, Power (by zoom) and Industries, federal secretaries and senior officers of various Ministries also attended the meeting, according to a press release issued by the Foreign Office Spokesperson.