Pakistan signs Roosevelt Hotel deal with US consortium

Published February 3, 2024
PIA had liabilities of Rs785bn ($2.81bn) and accumulated losses of Rs713bn as of June last year.—AFP
PIA had liabilities of Rs785bn ($2.81bn) and accumulated losses of Rs713bn as of June last year.—AFP

ISLAMABAD: The caretaker government on Friday signed an agreement with a US consortium for the joint venture development of the Roosevelt Hotel, a multi-million property owned by PIA Investment Limited, as the privatisation process of the loss-making PIA nears completion.

The financial advisory services agreement with the consortium led by Jones Lang LaSalle Americas Inc (JLL) was signed at the Privatisation Commission (PC). The Roosevelt Hotel is a priority transaction in the ongoing privatisation programme of the government. There were four entities on the list of real estate.

The transactions for Services International Hotel in Lahore and the sale of properties owned or controlled by the federal government have been completed. Only the Jinnah Convention Centre and Roosevelt Hotel remain on the list.

Speaking at the signing ceremony, Minister for Privatisation Fawad Hasan Fawad expressed full confidence in the ability and expertise of the financial advisory consortium to find the best possible partners and realise the maximum potential value from its development for the government of Pakistan.

Caretaker govt nears finalisation of PIA privatisation plan

In a subsequent meeting, a detailed roadmap and time-bound milestones were also agreed upon leading to the identification and selection of potential joint venture partners for the project.

The caretaker minister further stated that the government intends to develop the historic and landmark site in the heart of the financial capital of the world as an iconic structure with the most modern development features and standards.

The PC board, in its meeting in December, approved the appointment of the financial adviser for the joint venture development of the Roosevelt Hotel. A negotiating committee formed by the PC board concluded the financial services agreement with the successful bidder.

The commission had received technical and financial proposals from four parties. The consortium led by JLL was declared the “top-ranked interested party” based on the evaluation per the laid-down criteria.

Plans to sell PIA

In a relevant development, caretaker administration has nearly finalised plan to sell PIA, Reuters adds.

“Our job is 98 per cent done,” Privatisation Minister Fawad said when asked about the plan to sell the airline.

“The remaining two per cent is just to bring it on an excel sheet after the cabinet approves it.” Fawad said the plan, drawn up by transaction adviser Ernst & Young, will be presented to the cabinet for approval before the tenure of the administration ends following the election. The cabinet will also decide whether to sell the stake by tender or through a government-to-government deal, Fawad said.

“What we have done in just four months is what past governments have been trying to do for over a decade,” Fawad said. “There is no looking back.” Details of the privatisation process have not been previously reported.

Two sources close to the process said that a 51pc stake with full management control would be offered to buyers after parking the airline’s debts in a separate entity, under the 1,100-page report from Ernst & Young.

Reuters could not independently confirm the contents of the report. Mr Fawad did not give specific details of the size of the stake to be sold, but confirmed the plan involved the carrier’s debts being spun off into a separate entity.

Ernst & Young did not respond to requests for comment.

PIA spokesman Abdullah Hafeez Khan said the airline was assisting the privatisation process, extending “full cooperation” to the transaction adviser.

PIA had liabilities of Rs785 billion ($2.81 billion) and accumulated losses of Rs713bn as of June last year. Its CEO has said losses in 2023 were likely to be Rs112bn.

Published in Dawn, February 3rd, 2024

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