ISLAMABAD-A financial services agreement (FASA) has been signed between Privatisation Commission and the financial advisor for divestment of Pakistan International Airlines Corporation (PIACL).
The agreement was signed in the presence of the Minister for Privatisation, Fawad Hasan Fawad. The consortium led by Earnest & Young was invited for contract negotiations as financial advisor after approval by the Privatisation Commission Board in its meeting on 10th November, 2023. The financial advisor will be responsible for restructuring and carrying out legal, technical and financial due diligence for the proposed divestment together with fair valuation of PIACL. The minister expressed the hope and desire that the transaction will be carried out successfully despite the challenging economic environment. He assured the financial advisor of complete support of all institutions involved in the process to facilitate their work with a view to perform their task seamlessly in best possible interest.
Eight parties had submitted proposals to be the financial advisor. The Evaluation Committee, formed by the Privatisation Commission Board, declared the “Consortium led by Earnest & Young” as the top-ranked party based on criteria. The board established a negotiating committee to finalise the financial services agreement with the top-ranked bidder.
The Economic Coordination Committee (ECC) recently cleared a Rs 8 billion bridge financing package for the PIA, drawing from resources of the Civil Aviation Authority (CAA) to settle overdue payments. Under the chairmanship of caretaker Finance Minister Dr Shamshad Akhtar, the ECC had approved a bilateral arrangement between the CAA and the PIA. The Aviation Division’s proposal for financial support through the CAA to address the airline’s pressing needs has gained traction.
Meanwhile, Federal Minister for Privatisation, Fawad Hasan Fawad chaired a meeting of Privatisation Commission with HLB Ijaz Tabassum and Company, the financial advisor for sale of identified properties owned or controlled by federal government. 27 properties owned and controlled by government were approved for sale through Privatisation Commission by the cabinet in February, 2020. In the first round of auction in September, 2020 a total of 23 properties were auctioned out of which sale of 13 properties could not materialize later due to various reasons. Currently, 17 properties remain unsold for which services of the Financial Advisor were hired in December, 2021. The minister took serious notice of shortcomings in the current process and directed the Secretary, Privatisation Division to review the process in consultation with the financial advisor. The minister further directed that the properties shall be evaluated again particularly with regards to the title and other possible reasons for the unsuccessful sale in previous bidding process. He also directed that responsibility shall be fixed for delays and lapses within the Commission which has resulted in repeated failures of the auction process.