Privatization of PIA Delayed Again Amid Economic Challenges

The government has announced the immediate privatization of national institutions that are burdensome on the public treasury due to challenging economic conditions. The privatization of Pakistan International Airlines (PIA) has been delayed for quite some time.

During the caretaker government, the then Minister for Privatization, Fawad Hasan Fawad, stated that the privatization process was 98% complete and would proceed as soon as the new government was in place. Prime Minister Shehbaz Sharif had requested a final schedule for PIA’s privatization in March, initially setting deadlines for June and then August. However, the auction scheduled for October 1 has now been postponed to October 31.

According to sources from the Privatization Commission, all necessary preparations for PIA’s privatization have been completed, including the draft of the required agreement. However, interested parties are seeking more detailed evaluations before proceeding.

Reports indicate that any buyer of PIA will need approximately 80 billion PKR to operate the airline in the first year, in addition to repaying 200 billion PKR in debt. Initially, eight companies expressed interest in purchasing PIA, with six qualifying, but currently, only two companies—Air Blue and Blue World City—are showing significant interest.

Blue World City has engaged an international consultant and has conducted various meetings to assess the situation. The Secretary of the Privatization Commission had previously indicated that the bidding process for PIA was originally scheduled for June, but interested companies requested additional time to evaluate PIA’s operations. Representatives from these companies toured PIA, inspected aircraft, reviewed staff details, and even checked engine maintenance records. Two companies are also conducting evaluations with foreign firms.

According to Usman Bajwa, three meetings have taken place with these companies, and despite providing all requested information, they are seeking more details, which has delayed the bidding process until October. The companies are currently assessing PIA’s losses and debt obligations, further prolonging the privatization timeline.

The Secretary of the Privatization Commission noted that discussions about PIA’s privatization have been ongoing for the last ten years, and had it taken place in 2015, it could have significantly mitigated losses. He added that political factors have also obstructed the privatization process, emphasizing that a successful program requires collaboration from all stakeholders.

Previously, PIA had to pay commercial banks 10 billion PKR monthly in interest, but after negotiations, this rate has been reduced from 23% to 12%. Usman Bajwa stated that the government is prepared for privatization to the extent that it has already shared draft agreements with the interested companies. He mentioned that these companies are looking to acquire 75% of PIA’s shares, with one company seeking to purchase 100%.