THE ping-pong match for the sale of our national airline lasted all of 90 minutes. The game began at 5pm on Dec 23.
It had been scheduled for 4pm. The unexplained delay hardly mattered. Bidders who wanted their own airline would certainly wait another hour.
Unlike the first privatisation ‘loot’ sale of 31 units, held in a meena bazaar atmosphere on the lawns of the Privatisation Commission (PC) in May 1991, the auction of PIA’s shares took place in a five-star hotel, before television cameras and the press, to ensure ‘transparency and competitiveness’. On offer were 75 per cent of PIA shares, with an option to buy the remaining 25pc.
In an earlier attempt in 2024, the PC received only one offer — from the Blue World City consortium. Its bid of Rs10bn for a 60pc stake in PIA was embarrassingly less than the PC’s valuation of Rs85bn, and therefore rejected. PIA reappeared in the market this month.
What will the state do with the Rs135bn realised from the sale?
Undaunted by the PC’s preamble that “PIA has lost Rs800bn over the last 20 years”, three bidders — Lucky Cement consortium, Airblue, and the Arif Habib consortium — prepared for the match. Fauji Fertiliser, for tactical reasons withdrew, aiming to obtain PIA’s shares in another way.
The three sealed bids were extracted from a see-through box and opened with pedantic gravitas.
The first bid by Lucky Cement group (LC) was for Rs101.5bn. In retrospect, it seemed suspiciously close to the government’s reserve price of Rs100bn, announced after the bids had been opened.
The second bidder Airblue (the only contender with airline experience) pitched its offer at Rs26.5bn. Could that have been because Airblue knew too little or too much about PIA?
The third bidder Arif Habib consortium (AH) topped Lucky Cement by offering Rs115bn.
The PC officials went into a huddle for 30 minutes and returned at 5.40pm to declare the auction open, starting from Rs115bn. Offers could be made in steps of Rs250m.
The ping-pong game between the two highest bidders began in earnest, with seven speedy volleys and matched returns: LC Rs115.5bn/ AH Rs116bn; LC Rs116.25bn/ AH Rs116.50bn; LC Rs116.75bn/ AH Rs117.50bn, until the bidding stalled at LC Rs120.25bn/ AH Rs121bn.
A recess of 30 minutes was requested by LC at 5.55pm, during which the finance minister appeared briefly, to congratulate the PC team for its efforts and to laud the inherent patriotism that all the bidders were Pakistanis.
Bidding then resumed. Five more volleys, and the score crawled by stages from Rs125bn to Rs135bn. At that point, LC conceded defeat.
What interested viewers was the behaviour of the representatives of the two teams. The LC members consulted each other and some distant principals over their mobiles. An imperturbable Arif Habib sat with all the confidence of someone who has deep pockets as well as a patron with even deeper ones.
The terms of the transaction allow the buyer to bid for the remaining 25pc of PIA’s shares within 90 days. It can pay for the 75pc of PIA’s shares in two tranches — two thirds up front and the remaining one third after a year.
If the bidding process could be hailed as ‘transparent’, its aftermath is murky, spawning more questions than answers.
The morning after, Arif Habib announced that Fauji Fertiliser has joined its group, presumably to help AH exercise the option to buy the remaining 25pc of PIA’s shares.
Will the unsuccessful Lucky Cement Group acquire some of Arif Habib’s 75pc shares? It obviously has the resources and was prepared to pay Rs134bn for those 75pc shares.
What will the government do with the Rs135bn realised from the disinvestment? It has announced that it will retain only Rs10.12bn. The remaining Rs124.88bn will be ‘reinvested’ in PIA. How? As a loan or a subvention to reduce PIA’s liabilities?
It had been assumed that the government would use the privatisation proceeds to pay off the liabilities transferred by sleight of hand from PIACL to PIA Holding Company. At the time of PIA’s restructuring in 2024/5, the government assumed direct responsibility for Rs654bn. These included bank debts of Rs268bn, government debt of Rs170bn, employees’ liabilities of Rs44bn, operating liabilities of Rs188bn, and dues of Rs144bn owed to the Civil Aviation Authority and Pakistan State Oil.
The privatisation of PIA should be a case study, and taught in business schools. Future students can then fathom at leisure the reality hidden behind the screen of televised obfuscation.
The writer is an author.
www.fsaijazuddin.pk
Published in Dawn, December 25th, 2025