PIA sale delayed for third time, no new date set

By Staff Reporter

ISLAMABAD: The government plans to privatize the loss-making Pakistan International Airlines (PIA) have hit another snag, with the government delaying the sale for a third time, as it struggles to address concerns of potential bidders and meet IMF loan conditions.

The sale is a key condition of a $7 billion International Monetary Fund (IMF) loan approved on Wednesday, which requires Pakistan to implement economic reforms, including privatizing state-owned enterprises.

“Bidding is postponed but no new date is given officially,” Dr. Ahsan Ishaq, spokesperson for the privatization ministry, said.

Pakistan selected six bidders in June, including Air Blue Ltd. and Arif Habib Corp., and initially planned to finalize the sale by Aug. 14. However, bidders requested more time to review PIA’s audited accounts, aircraft lease agreements, and European flight routes.

Later the government planned to auction off the country’s national carrier on Oct. 1, as part of a broader push to privatize state-owned enterprises and shore up public finances.

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 country’s central bank in August refused to waive or exempt potential buyers from PIA’s Rs268 billion commercial bank loans.

Privatisation of loss-making SOEs has long been on the IMF’s list of recommendations for Pakistan. 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.