The privatisation of Pakistan International Airline (PIA) is expected to be completed by October 1, according to a statement made to the Senate Standing Committee on Privatisation. Islamabad has been investing billions into struggling state-owned enterprises (SOEs), including PIA, which is now in the final stages of being sold.
In June 2023, Pakistan agreed with the International Monetary Fund (IMF) on a $3 billion bailout that included overhauling failing SOEs. The decision to privatise PIA came shortly after the IMF agreement.
Privatisation Commission Secretary Usman Bajwa stated in the Senate Standing Committee meeting that efforts are being made to ensure the privatisation of PIA is finalized by October 1. He noted that six companies are currently in the bidding process, and an extension might be required if due diligence for these companies isn’t completed on time.
The new owner of PIA will need to invest Rs425 billion immediately for the airline’s operations. The airline’s deficit has reached Rs500 billion. The federal government granted a two-month extension for the due diligence period due to requests from bidding parties, pushing the deadline to October 1, 2024. Additionally, the Privatisation Commission proposed that the winning bidder retain existing employees for up to three years.
Since February 2015, PIA has amassed losses totaling Rs599 billion (US$3.34 billion), with Rs75-80 billion of this amount accrued last year alone. Jawad Paul, Secretary of the Privatisation Division, mentioned that four of the six interested bidders had requested extensions ranging from 60 days to six months, leading the government to grant a two-month extension.
Pre-qualified bidders visited PIA’s Karachi facilities in late June, and pre-bid meetings were held in July and August. The final bidding will be live-streamed for transparency. Once due diligence is complete, the government will finalize the bidding documents and seek approvals from the Cabinet Committee on Privatisation (CCoP) and the federal cabinet before awarding the contract.
During the meeting, it was disclosed that the financial adviser hired for the privatisation process had been paid billions despite the process being halted. The adviser received Rs330 million for the Haveli Bahadur Shah power plant, Rs130 million for the Balloki power plant, and Rs7 million for the Jinnah Convention Centre’s privatisation, all of which have been suspended.
