ISLAMABAD: The formal process for the divestment of Pakistan International Airlines Corporation (PIACL) kicked off on Friday after the Board of Privatisation Commission appointed a financial adviser for the transaction.
The consortium led by Earnest & Young emerged as the winner among eight interested parties that submitted their technical and financial proposals for the hiring of financial advisers for PIACL privatisation.
Based on the laid down criteria, the evaluation committee formed by the PC Board declared Earnest & Young as top top-ranked interested party.
The board formed a negotiating committee and tasked it to conclude the financial services agreement with the successful bidder.
Available information showed PIA began to be unprofitable in 2011, requiring government subsidies. By the end of 2016, the national flag carrier was saddled with $3 billion in debt. At the end of 2018, the airline was burdened with $3.3bn in debt, up from $2.97bn the year before, and this required government bailouts for continued operation.
An audit in September 2019 revealed that PIA had operated 46 empty flights between 2016 and 2017, without any passengers causing a loss of $1.1m to the airline. Additionally, 36 Haj flights were flown without any passengers.
The agenda of the PC board meeting also included the extension of the financial services agreement with the financial advisor for House Building Finance Corporation Ltd (HBFCL) and the revival of the financial services agreement for the First Women Bank Ltd (FWBL).
The committee also discussed at length the issues regarding the 35-year-long pending privatisation of Pak-China Fertiliser Ltd.
The financial services agreement for HBFCL had expired in January this year and the board accorded approval for a 24-month extension.
The board also approved the revision of cost due to additional work required from the financial advisor. Similarly, the financial services agreement for FWBL expired in April this year. The agreement has been accorded a 24-month extension with a price adjustment for the changed scope of work.
The board decided that the responsibility for the unnecessary delay in the privatisation of both HBFCL and FWBL may be fixed after a detailed enquiry into the matter.
The board after considering the issues and litigation in the privatisation of Pak-China Fertiliser Ltd directed that details of all proceedings since the initiation of the privatisation contract be shared with the board in its next meeting.
The board resolved to determine the factors behind the change of stance of the privatisation commission more than once despite the arbitration award decision in 1997.
It was decided that the board would form a final stance for presenting to the court in its next meeting after considering all the details involved.
Published in Dawn, November 11th, 2023