The government has announced plans to invite expressions of interest for the privatization of Pakistan International Airlines (PIA) within the month, following a previous unsuccessful attempt last year.
In the earlier privatization effort on October 31, 2024, PIA received only Rs10 billion from a single bidder for a stake in the airline, significantly lower than the expected minimum price of Rs85 billion. As a result, the process stalled, prompting the government to relaunch the initiative.
During a meeting of the Standing Committee on Privatization, chaired by MNA Muhammad Farooq Sattar, officials from the Privatization Commission informed members that the federal government has decided to restart the privatization process, with a final decision to be made by the Prime Minister’s Committee on Privatization. They stated that multiple interested bidders have returned for this round.
Previously, bidders had suggested removing the 18% GST on the procurement of new aircraft, arguing that eliminating this tax would encourage fleet expansion and growth in the aviation sector. The government took these concerns to the International Monetary Fund (IMF), which agreed that if PIA is privatized, the GST could be waived to facilitate private-sector investment. Additionally, a structured plan will be developed to address PIA’s Rs45 billion liabilities, including Rs26 billion in unpaid taxes to the Federal Board of Revenue (FBR), Rs10 billion owed to the Civil Aviation Authority (CAA), and outstanding pension obligations. The aim is to prevent financial burdens from deterring potential investors.
The Committee was also informed that PIA’s non-core assets are not included in the privatization process. Instead, a separate policy is being developed, for which a consultant has already been hired. The consultant has presented two to three potential approaches to the Cabinet Committee on Privatization (CCoP), which will select one and issue a formal policy.
In addition, the Committee reviewed “The Privatization Commission (Amendment) Bill 2024” and raised concerns regarding Clause 4, Section 7(4). Members questioned whether there was any legal precedent for granting the Prime Minister direct authority over privatization decisions instead of the Cabinet. The Ministry of Law was instructed to provide clarification in the next meeting, leading to the bill’s postponement until further discussion.
The Committee also deliberated on the privatization of electricity distribution companies (DISCOs). In the initial phase, three companies—IESCO, FESCO, and GEPCO—will be privatized. Two firms submitted bids, and the board selected “Alvarez & Marsal Middle East Limited” as the recommended firm. The final bidder later presented its proposal to the Ministers of Finance and Law, who approved the agreement.
However, before finalizing the privatization, specific provisions must be met. The Power Division and NEPRA, in collaboration with the World Bank, are working to resolve these outstanding issues to establish a stable framework for the bidding process, ensuring a smooth transition for potential investors.
