PIA Privatization Efforts Resurface as Government Plans to Offload Majority Stake by Year-End

Pakistan International Airlines (PIA), once considered a symbol of national pride, has long been a financial burden on the country’s economy. The talks of privatizing the state-owned airline have been ongoing since 2014, yet the process remains incomplete. Recently, the government has taken steps to reduce PIA’s mounting debt by transferring over 80% of its liabilities to a separate company, PIACL (PIA Corporation Limited), in a bid to alleviate the financial strain.

In a significant move last year, on October 31, a bidding process was held for PIA’s privatization. However, the process was less than successful, with only one company showing interest, submitting a bid of just 10 billion Pakistani rupees. The bid was rejected, as the reserve price for PIA was set at 85.3 billion rupees. As a result, the privatization process remained stalled.

Now, in a new development, the Privatization Commission has informed the Senate’s Committee on Privatization that fresh advertisements for the sale of PIA will soon be issued, with the bidding process expected to conclude by the end of this year.

Secretary of the Privatization Commission, Usman Bajwa, explained that the unsuccessful privatization bid was due to PIA’s 45 billion rupees debt, as well as an 18% sales tax on the purchase of new aircraft. After negotiations with the International Monetary Fund (IMF), it has been decided that PIA’s 45 billion rupees debt will be transferred to a new holding company, thereby relieving PIA from the financial burden. Additionally, the new aircraft will be exempt from the 18% sales tax, further incentivizing potential investors.

According to Bajwa, PIA currently holds operational debt and aircraft lease obligations, but with the new measures in place, the airline will be more attractive to potential buyers. A special committee, formed under the directive of the Prime Minister, has held several meetings between December and March to assess the level of interest from potential buyers. This committee has been working to gauge how much investors are willing to pay for PIA’s assets.

On March 17, the committee presented a new proposal for PIA’s privatization. Previously, 65% of PIA’s shares were up for auction, but this time, between 51% to 100% of the shares will be offered for sale. In addition, the qualification criteria for potential buyers have been made stricter to ensure that only capable investors can acquire a stake in the national airline.

The Secretary of the Privatization Commission expressed confidence that this time the privatization process will be completed successfully. He further noted that some of the companies that previously lost interest in purchasing PIA are now showing renewed interest, signaling that the changes in the privatization plan could attract more serious bids.

The future of PIA remains uncertain, but with the government’s renewed efforts and significant changes in the privatization process, there may soon be a resolution to the longstanding financial crisis of Pakistan’s national airline.