PIA privatisation expected to be completed by Oct 1, Senate body told

ISLAMABAD: The Pakistan International Airline’s (PIA) privatisation process will not be extended beyond October 1, Privatisation Commission Secretary Usman Bajwa informed Senate Standing Committee on Privatisation on Thursday.

Islamabad has for years been pumping billions of dollars into cash-bleeding state-owned enterprises (SOEs) to keep them afloat.

The government agreed in June 2023 to overhaul loss-making SOEs under a deal with the International Monetary Fund (IMF) for a $3 billion bailout.

The national carrier was emerged as the foremost priority for privatisation due to its persistent and staggering financial losses, amounting to billions of rupees annually. Hence, the present government initiated process of floating the PIA for its sell off.

During today’s meeting of the Senate Standing Committee, Secretary Bajwa assured that the date of PIA’s privatisation process would not exceed October 1.

He pointed out that six companies were finalised for the national carrier’s bidding, which — according to him — would need to be extended if “due diligence” of interested companies is not completed.

“Whoever buys the PIA will have to invest Rs425 billion immediately for its smooth functioning,” he said, with the meeting’s participants noting that the airline’s deficit had reached Rs500 billion.

Earlier, the federal government had granted a two-month extension to the due diligence period for the airline’s privatisation process, now set to conclude by October 1, 2024.

The decision, prompted by requests from bidding parties, includes a proposal by Privatisation Commission for the winning bidder to retain existing employees for up to three years.

Since February 2015, PIA has accumulated staggering losses of Rs599 billion (US$3.34 billion), with last year alone accounting for Rs75-80 billion in red ink, according to Jawad Paul, Secretary of the Privatisation Division.

Speaking before the National Assembly’s Standing Committee on Privatisation on Monday, Jawad Paul noted that four out of the six interested bidders had requested extensions ranging from 60 days to six months, leading the government to settle on a two-month extension.

Pre-qualified bidders have conducted site visits to PIA’s facilities in Karachi in late June, followed by a series of pre-bid meetings in July and August. These steps are part of a meticulous process leading up to the final bidding, which will include live streaming to ensure transparency.

Once the due diligence is complete, the government plans to finalise bidding documents and seek approvals from the Cabinet Committee on Privatisation (CCoP) and the federal cabinet before contract signing and awarding.

'Financial adviser paid billions'

During today’s meeting, it was revealed that the financial adviser — hired to prepare a plan for privatisation — was being paid billions despite a halt to the process.

Secretary Bajwa pointed out that the Haveli Bahadur Shah and Balloki power plants were delisted from the privatisation list.

“The financial adviser was paid Rs330 million and Rs130 million despite suspension of privatisation of National Power Park Company and Pakistan Steel Mills, respectively,” the committee was told.

Furthermore, Rs7 million was provided to the adviser on account of Jinnah Convention Centre’s privatisation — which was also suspended.