PIA sale stalls as lone bid ‘too low to consider’
ISLAMABAD: The much-anticipated privatisation of Pakistan International Airlines (PIA) stalled on Thursday as the sole bid was around Rs75 billion lower than the government’s expectations.
The Blue World City consortium submitted its bid of Rs10 billion against the minimum price of Rs85.03bn, fixed by the Privatisation Commission.
The government had pre-qualified six groups in June, but only the real estate development company participated in the final bidding process.
Due to the huge difference between the expected and actual bids, the commission gave the consortium more time to reconsider its bid.
However, Blue World City consortium chairman Saad Nazir kept the price unchanged.
Blue World City quotes Rs10 billion against expected bid of Rs85bn; says it doesn’t make commercial sense to raise bid for airline with ‘significant leakages’
He said the bid price was “in accordance with our assessments” and that they would stand by the quoted price.
“If the government does not privatise PIA, we wish all the best for them, and if they want to run the airline themselves, we pray for them”, Mr Nazir said.
He later told Reuters that it did not make commercial sense to raise their bid.
According to Mr Nazir, the government’s minimum price was not based on a correct financial model for an organisation with “significant leakages”.
The bidding process, held in Islamabad on Thursday, consisted of two phases. In the first phase, the lone bidder, Blue World City consortium, submitted its bid, which was opened hours later during the second phase.
The commission explained that in the event of a sole bidder, and if the bid price was less than the government’s expectation, the commission could decide “whether to continue the bidding process” or request the bidder “to match its bid price with the minimum expectations” of the commission.“
If the bidder declines the commission’s request or submits a revised bid which is still lower than the expected price, the bidding process will stop, and the commission will ask the federal cabinet for approval, as per the rules.
According to the Privatisation Commission Ordinance, the cabinet can declare the sole bidder successful, or reject their offer.
“If [the cabinet doesn’t] accept our offer, we will start our own airline,” Mr Nazir told Reuters.
Prior to the start of the bidding process, he told a television channel that if their bid was not accepted, PIA would “go into the hands of a foreign country at any price”.
He expressed reservations over the government’s decision to divest only 60 per cent of shares and keep its hold on the remaining stake.
He was of the view that PIA’s business model needed to be streamlined, and claimed his consortium has a “comprehensive plan” to run the airline.
‘Unjust privatisation’
The bidding process also sparked strong reaction from politicians and labour unions.
The PIA Employees Union has filed a petition in the Rawalpindi bench of Lahore High Court against the privatisation process.
The government’s ally, PPP, has also chastised the Privatisation Commission for “keeping parliament in the dark” about the bidding process.
The labour wing of PPP has also criticised the bidding process and called it unlawful.
While addressing a press conference in Islamabad on Thursday, Peoples Labour Bureau chairman Chaudhry Manzoor Ahmed claimed the bidding process violated the Procurement Regulatory Authority rules.
He said whenever PML-N comes into power, it attempts to privatise PIA.
Mr Ahmed, who is also an ex-MNA, claimed PIA earned a profit of Rs9bn last year and its remaining losses “could be overcome by acquiring more aircrafts” to generate revenue.
He threatened to hold weekly protests across the country against the privatisation of state-owned entities.
PIA Employees’ Union President Hidayatullah said his organisation will never allow this “unjust” privatisation.
He said the national flag carrier has 34 aircraft in its fleet, of which only 16 were operational while 18 have been grounded, due to which the airline was facing financial difficulties.
Syed Irfan Raza also contributed to this report
Published in Dawn, November 1st, 2024
