By Staff Reporter
ISLAMABAD: The government said on Friday it will auction off the country’s national carrier, Pakistan International Airlines (PIA), on Oct. 1, as part of a broader push to privatize state-owned enterprises and shore up public finances.
The Privatization Commission Board announced the auction date after a meeting to evaluate the ongoing sales process.
“The bidding for PIACL is planned for 1st October 2024,” a government statement after the board meeting said. “The board reviewed the current status of PIA privatisation and considered the recommendations of the financial advisor with respect to the permitted changes under the terms of the Request for Statement of Qualification (RSOQ).”
The government initially sought to finalize the privatization deal before the country’s Independence Day but delayed the process due to requests from bidders seeking PIA’s latest audited accounts, aircraft lease agreements, and clarity on flights to Europe.
Six bidders, including Fly Jinnah, a consortium led by YB Holdings (Private) Limited, Air Blue Limited, a consortium led by Pak Ethanol (Private) Limited, Arif Habib Corporation Limited, and Blue World City, have been pre-qualified for the auction. Ernst & Young has been selected as the financial adviser for the partial privatization of PIA.
The national carrier, saddled with over Rs800 billion debt, has been struggling to regain traction since a 2020 plane crash in Karachi led to the suspension of European flights. The crash, which killed 97 people, prompted the European Union Aviation Safety Agency to ban PIA due to concerns over fake pilot licenses.
The sale is crucial for Pakistan’s efforts to meet International Monetary Fund recommendations to privatize loss-making state-owned entities, including PIA, as part of Pakistan’s economic rationalization efforts.
Privatisation of loss-making SOEs has long been on the IMF’s list of recommendations for Pakistan, which is struggling with a high fiscal shortfall and a huge external financing gap. Foreign exchange reserves are hardly enough to meet a couple of months of controlled imports.
The IMF previously said SOEs in Pakistan hold sizable assets, yet their share of employment in the economy is relatively low. It estimates almost half of the SOEs operated at a loss.
Past privatisation drives have been patchy due to a lack of political will. Islamabad has been pumping billions of dollars into cash-bleeding SOEs to keep them afloat, including one of the largest loss-making enterprises PIA.
Pakistan has listed 25 entities and assets on its privatisation list. Most entities are in the power sector, including four power plants, two of which are over 1,200MWs, and 10 generation and distribution companies. The list also includes the valuable Roosevelt hotel in New York’s Manhattan and two insurance companies.
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