- Govt to invest 92.5% of bidding proceeds back into PIA: PM’s aide.
- PIA to need additional Rs80bn after privatisation for stabilisation.
- M Ali says Rs33bn in liabilities, other major hurdles removed.
ISLAMABAD: The government is set to auction 75% stake in the Pakistan International Airlines (PIA) with a commitment to reinvest most of the proceeds back into the national airline marred by financial woes, The News reported on Friday, citing officials’ briefing to a Senate panel.
Prime Minister’s Adviser on Privatisation Muhammad Ali said 92.5% of the bidding proceeds would be reinvested in PIA to support its turnaround, adding that the airline would still require an additional Rs80 billion in financing after privatisation to stabilise operations and fund growth.
He said the government plans to place some electricity distribution companies (Discos) under long-term concession agreements rather than selling them outright.
Ali briefed the Senate Standing Committee on Privatisation, chaired by Senator Afnan Ullah Khan, that PIA currently operates 18 aircraft and needs fresh investment to induct new planes. He said the reference price for the bidding has not yet been finalised.
Only the airline’s core aviation business is being privatised, he added, while assets such as the Roosevelt Hotel in New York will remain under government ownership and would be developed through a joint venture instead of privatisation.
Privatisation Commission Secretary Usman Bajwa told the committee that the government could sell up to 100% of PIA shares, depending on investor interest and final approvals.
He said major obstacles that undermined a previous privatisation attempt have been removed, including Rs33 billion in liabilities that investors were earlier required to assume.
Tax-related issues, including those linked to sales tax, have also been resolved, he said.
Bajwa said the reopening of routes to Britain and Europe has strengthened PIA’s commercial outlook, while negotiations with investors over final commercial terms have entered the final stage and are expected to conclude imminently.
Following privatisation, the airline will immediately need about Rs80 billion in financing to sustain operations.
On the power side, officials from the Power Division said Guddu, a gas-fired plant supplied with 125 million cubic feet of indigenous gas, and Nandipur are ready for privatisation.
A ministerial committee has been formed to settle residual issues, while a financial adviser will present final proposals for Nandipur. The committee was told that Iesco, Fesco and Gepco will be privatised in the first phase, with bidding expected by mid-next year.
Instead of outright sale, Hesco and Sepco will be offered under long-term concession agreements, under which private operators will manage the utilities and earn profits only if they reduce losses and improve service delivery.
