ISLAMABAD: The National Assembly’s Standing Committee on Privatization was informed on Thursday that the privatization process for Pakistan International Airlines (PIA) has resumed, while recommendations for the sale of the Roosevelt Hotel in New York have been finalized. The privatization of the House Building Finance Corporation is also in its final stages.
The committee, chaired by MNA Farooq Sattar, was briefed by Privatization Commission Secretary Usman Bajwa. He revealed that the earlier privatization efforts for PIA were stalled due to two unresolved investor demands. Prospective buyers had requested GST relief for new aircraft to compete globally and the resolution of negative equity. However, these demands could not be met due to International Monetary Fund (IMF) conditions.
“Following negotiations with the IMF, these conditions have now been waived. Additionally, the European ban on PIA has been lifted, paving the way for renewed privatization efforts,” Bajwa said. He added that the government has approved the issuance of an Expression of Interest (EOI), and applications will be invited by the end of this month.
Regarding the Roosevelt Hotel, the committee was informed that a subcommittee has prepared new recommendations for its privatization. The next steps will be taken after approval from the Cabinet Committee on Privatization (CCoP).
He added that revenue from the hotel’s privatization is expected to be lower than a joint venture but could still generate significant income. “The final decision will rest with the government,” he clarified.
The secretary noted that a joint venture approach would delay the privatization process, whereas a direct sale could expedite proceedings.
On the House Building Finance Corporation, Bajwa stated that the process has reached its final phase. “A company interested in the privatization has accepted the final terms and conditions, and bidding will be held soon,” he assured the committee.
“The agreement on key terms has been reached with the interested party. The next step is to seek approval from the Privatization Board and the Cabinet Committee on Privatization,” the secretary stated.
Once approved, the government will instruct the buyer to determine the price of the HBFC. The secretary also noted that with a reduction in interest rates, there is potential for an increase in housing finance availability in the future.
However, lawmakers expressed doubts over the government’s commitment to privatization, highlighting issues in the privatization process of PIA and the House Building Finance Corporation (HBFC).
“Why does only one bidder remain in privatization deals?” asked Khawaja Shiraz Mahmood, pointing to the ongoing concerns after the PIA privatization debacle. “After the humiliation of PIA’s privatization, now only one bidder is left for HBFC,” he added.
The Secretary of the Privatization Commission explained that while strict conditions in the HBFC privatization process led to only one bidder remaining, “two bidders remained until the end, but one failed to meet the conditions set by the State Bank,” he said.
Khawaja Shiraz Mahmood questioned if the government is genuinely serious about privatization or merely showcasing superficial efforts. He also raised concerns about the privatization process, suggesting flaws that are hindering progress. Sahar Kamran, another committee member, questioned the costs involved in the PIA privatization, demanding accountability for the expenses. “Who is responsible for the expenses incurred in PIA’s privatization?” she asked, emphasizing the need to address accountability.
Farooq Sattar, addressing the committee, remarked, “We will take time to find the right solution; only then can the right price be set.” He also suggested that the performance of PIA’s financial advisor, Ernst & Young, should be reviewed.
The committee is awaiting further details on the expenditures of the PIA privatization, with the Secretary of the Privatization Commission assuring that complete information will be provided later.
“Why did other parties not come forward for the bid?” questioned Farooq Sattar, pointing to the core issue. Khawaja Shiraz Mahmood expressed dissatisfaction, asking, “Why did the Privatization Commission fail to convince other parties?”
The Secretary of the Privatization Commission explained that all interested parties were given a comprehensive briefing, with discussions held on 11 key points during the final meeting before the bid. However, only two points remained unresolved, leading to complications.
One bidder requested management control instead of participating in the bidding process, another demanded the dismissal of all employees, and a third sought GST relief for new aircraft to improve international competitiveness. Furthermore, a bidder proposed adjusting PIA’s Rs191 billion liabilities against Rs141 billion assets.
“The main issue was the adjustment of negative capital of Rs45 billion,” the Secretary explained, adding that the government rejected relief due to the conditions of the IMF program.
Following negotiations, the IMF allowed the removal of two key conditions, and Europe lifted its ban. “The government has approved issuing a fresh Expression of Interest (EOI), and work on the privatization process is moving forward swiftly,” the Secretary confirmed, adding that the government is continuing talks with investors.