Pakistan taps ADB to run sale of Islamabad airport

By Staff Reporter

ISLAMABAD: The Privatisation Commission board approved an agreement on Friday appointing the Asian Development Bank as transaction adviser for the outsourcing of Islamabad International Airport, clearing a key hurdle in the government’s push to hand over management of the country’s flagship gateway to private operators.

The board signed off on the Transaction Advisory Services Agreement with the Manila-based lender during its 255th meeting, chaired by Muhammad Ali, adviser to Prime Minister Shehbaz Sharif on privatization and the commission’s chairman. The decision followed months of negotiations that began in February, when the board formed a committee to hammer out terms with ADB and report back for final sign-off.

Under the arrangement, Islamabad’s airport will be handed to a qualified private operator through a long-term concession awarded via competitive bidding, according to a statement from the Ministry of Privatisation. The board said it expects ADB’s expertise to help push the deal through quickly while preserving what it described as maximum competition and transparency — language officials have repeated as they try to reassure investors after an earlier attempt to offload the facility fell apart.

That earlier effort centered on a government-to-government arrangement with the United Arab Emirates, which stalled and was ultimately shelved after Abu Dhabi’s interest cooled. Islamabad shifted to open bidding for all three of its major international airports late last year, a move officials have framed as a bid to widen the pool of bidders rather than any diplomatic setback.

The government is targeting completion of the Islamabad transaction within the current fiscal year, which runs through June. Ali told Dawn newspaper last month that the airport’s privatization was planned for the 2026-27 fiscal year and that ADB’s selection as adviser came with revised contract terms, including adjustments to indemnity clauses to reflect the bank’s status as a multilateral institution. The Cabinet Committee on Privatisation signed off on those negotiated terms before Friday’s board approval.

Opened in 2018 at a cost exceeding $1 billion, Islamabad International Airport has drawn persistent criticism over construction delays, substandard facilities and operational shortcomings that officials hope a private operator can address. The government has cast the sale as part of a broader effort to improve passenger experience and bring the facility in line with international standards.

Karachi’s Jinnah International Airport and Lahore’s Allama Iqbal International Airport are next in line. Ali said the process of hiring financial advisers for both facilities would begin immediately, after earlier government-to-government talks failed to advance as officials had hoped. Local media reported this week that each of the two airports could draw more than $500 million in fresh investment once outsourced. All three airports were folded into Pakistan’s revised five-year privatization program this year, alongside seven electricity distribution companies, as part of a plan to divest or restructure 25 state-owned entities in three phases.

The airport deal marks the latest step in a privatization drive that has gathered pace since Islamabad made shedding state assets a central plank of economic policy roughly two years ago. Finance Minister Muhammad Aurangzeb told lawmakers during his budget speech for the last fiscal year that the government should not be in business, framing the push as consistent with Prime Minister Sharif’s broader ambition to shrink the state’s footprint in commercial activity and give the private sector more room to operate.

That approach has already produced one marquee transaction. Pakistan International Airlines is set to be formally transferred to its new private owners this month, more than half a year after the government named a winning bidder, following delays tied to international regulatory clearances for the carrier’s operating rights in various countries.

The push to privatize Pakistan’s airports and other state assets comes as the government works under a $7 billion International Monetary Fund program that has pressed Islamabad to reduce the footprint of loss-making public enterprises and shore up public finances.