ISLAMABAD: A top official of the Pakistan International Airlines (PIA) informed the National Assembly Standing Committee on Privatisation on Wednesday that US President Donald Trump has shown interest in buying the PIA-owned Roosevelt Hotel.
The revelation by the managing director of PIA Investments Ltd, Najeeb Samie, surprised the Privatisation Commission officials, who are starting the process for the transaction structure as decided by the Cabinet Committee on Privatisation, to identify a strategic investor who can make the PIA asset profitable.
Mr Samie said it was not profitable for the PIA to run the entire hotel on its own and it should be replaced with offices and hotels within the structure in New York’s mid-town Manhattan.
Mr Samie’s disclosure came when Khawaja Asif of the PML-N asked him whether anyone had shown interest in purchasing the hotel.
It had been decided to lease out the hotel on a long-term basis, the head of PIA Investments Ltd said.
A senior official of the Privatisation Commission told Dawn that the head of PIA Investments had never mentioned this breaking news in any meeting of the Privatisation Commission that discussed affairs of the PIA and Roosevelt Hotel.
Briefing the standing committee, Mr Samie stated that the 19-storey hotel incurred a loss of $1.5 million last year. Roosevelt Hotel’s structure being 100 years old is constantly in need of repair and maintenance, requiring substantial investments without corresponding returns.
Mr Asif said his party did not oppose privatisation but the time was not conducive for such an exercise since Covid-19 pandemic had badly affected the market prices of almost everything. At the same time, he said the rights of the employees should be protected whenever the privatisation is carried out. People who own real-estate businesses abroad should not be made part of the body deciding the hotel’s fate as it could lead to corruption, he said.
Privatisation Minister Muhammed mian Soomro informed the committee that certain options were being evaluated for the future of Roosevelt Hotel and a consortium of financial advisers would decide about the leasing of the hotel.
The Cabinet Committee on Privatisation in 2019 had directed the authorities concerned to carry out a feasibility study for appraisal of various management and financial options for gaining optimal returns from the hotel.
On Wednesday, the NA committee decided to share the report of Deloitte, a consulting and advisory company, with the committee before next meeting.
The ministry of privatisation informed the committee that a financial adviser was being appointed for evaluation and advice on different options. The committee suggested that it was not right time to make any decision on Roosevelt Hotel due to Covid-19 effects on economy and business environment. Moreover, it will not be a wise decision to sell assets and invest in a business which is making losses.
The hotel consisting of 1,025 rooms, meeting spaces, four restaurants and a rooftop lounge and named after President Theodore Roosevelt opened on Sept 22, 1924. The hotel was closed for an extensive $65 million renovation from 1995 to 1997. Beginning in 1979, the hotel was leased by the PIA through its investment arm, the PIA Investments Ltd, with an option to purchase the building after 20 years. In 1999, the PIA exercised this option and bought the hotel for $36.5m.
In 2005, the PIA entered into a deal with a Saudi partner that included the prince’s share in Hotel Scribe in Paris in exchange for $40m and the PIA’s share in Riyadh Minhal Hotel, located on property owned by the prince. The PIA has since 99 per cent shares in the hotel while the Saudis have only 1pc.
The secretary of the Aviation Division briefed the committee about the issue of suspected licenses of pilots and said that in 2018 a pilot pointed out some anomalies in examinations of pilots conducted by the Civil Aviation Authority (CAA). A committee was constituted in February 2019 to investigate the matter and the report was finalised in June 2019 and submitted to the prime minister.
The NA committee was also informed that the authority was further investigating the matter. Other international airlines are also referring cases for verification of licenses of Pakistani pilots working in these airlines and the authority has issued the clearances after verification.
The meeting was attended by MNAs Khawaja Saad Rafique, Zulfiqar Ali Khan Dullah, Umer Aslam Khan, Faheem Khan, Syma Nadeem, Mukhtar Ahmad Malik, Mohammad Shahbaz Babar, Mohammad Riaz, Mohammad Pervaiz Malik, Seema Mohiuddin Jameeli, Syed Hussain Tariq, Siknandar Ali Rahoupoto and the ministers for privatisation and aviation, beside senior officials of concerned ministries.
Published in Dawn, July 16th, 2020