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ISLAMABAD: Months after its first attempt to sell off Pakistan International Airlines (PIA) stalled, the government on Thursday invited fresh bids with more incentives for buyers.
The investors can submit an expression of interest by June 3, with the bidding process expected to take place between October and December.
The government is offering 51 to 100 per cent share capital, with management control of the national flag carrier.
This time around, the government has sweetened the deal by adding incentives, such as exemption from 18 per cent General Sales Tax on the lease or purchase of new aircraft; additional support to improve the effective net equity position of PIA’s balance sheet, which may include indemnification or transfer of certain liabilities; and coverage against certain tax and litigation claims.
The incentives were announced by PM’s Adviser on Privatisation, Muhammad Ali, and Privatisation Secretary Usman Akhtar Bajwa, while speaking to a group of reporters in Islamabad.
The equity stake may comprise sale of shares held by PIA Holdco, subscription of PIA shares or a combination of both.
The national carrier may enter into operational arrangements such as office space and sales offices with PIA Holdco if considered necessary for smooth and continued operations, which would be determined during the course of the privatisation process, the expression of interest notice said
Mr Ali said while privatising PIA, the government wants a “consistent revenue base”, for which the previous requirement of technical management capability of Rs200 billion has now been enhanced with a new requirement of Rs100 billion on the average basis of the previous three years.
He said existing airlines can bid for PIA; however, for non-airline businesses, management, the technical and management capability condition will be last ten years with a minimum annual revenue of Rs200 billion as evidenced by audited financials of December 2023 or later.
The adviser further explained that the lead consortium members can be allowed to be replaced at least 15 days prior to bidding, subject to compliance with the pre-qualification criteria requirements and request for statement of qualification.
The expression of interest document said the airline’s historic tax losses will be available for the restructured PIA to shelter future profits.
Restructured PIA
The government is hoping for better results this time as compared to the previous privatisation attempt last year, which failed because the sole bid was around Rs75 billion lower than the expectations.
Last time, 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.
The government has also restructured PIA, moving a considerable proportion of legacy debt, along with some non-aviation assets, to a holding company.
The liabilities of PIA, which once stood at Rs864bn, have now been reduced to around Rs190bn —debt, leases and operational liabilities of Rs148bn and employees and contingent liabilities of Rs36 billion.
Non-core assets of Rs20bn will also be carved out into the PIA Holding Company Limited.
Earlier this month, the airline announced an operational profit of Rs3.9 billion and a net profit of Rs2.26bn, the first instance of profitability in around 21 years.
This airline’s flights to Europe, which were suspended when it was last put on sale, have also resumed since the start of this year.
Published in Dawn, April 25th, 2025
