Turkish Group
KARACHI: A Turkish consortium, the only bidder for taking over the operations of Islamabad’s airport, has proposed a concession fee that falls below the minimum threshold set by the Pakistani government.
The consortium, consisting of Terminal Yapi, ERG Insaat, and ERG UK, offered to pay 47% of its revenue from airport operations as a concession fee.
However, the government had set the minimum required concession fee at 56%, creating a discrepancy between the proposal and the government’s expectations.
Pakistan, facing economic challenges and a significant financial shortfall, has been accelerating efforts to privatize key state-owned enterprises in a bid to generate revenue.
Outsourcing the operations of three major airports, including Islamabad Airport, is a crucial part of this strategy. The move is also aligned with Pakistan’s broader economic reforms, as the country works under the guidance of a $7 billion loan agreement with the International Monetary Fund (IMF) aimed at stabilizing its economy.
The Turkish consortium’s bid is now under review, and the details of the financial proposal will be sent to the International Finance Corporation (IFC), a member of the World Bank Group, for further evaluation.
The IFC is providing advisory services to Pakistan in its privatization efforts. Sadiq ur Rehman, the chairman of the bid evaluation committee and deputy director general of the Pakistan Airports Authority, stated that the final reports from the IFC will guide Pakistan in deciding whether to accept the bid or not.
In addition to the airport privatization efforts, Pakistan is also exploring the possibility of offloading a 60% stake in its debt-ridden national airline, PIA.
This is part of the government’s broader strategy to raise funds and implement necessary reforms in state-owned enterprises.
A recent attempt to privatize PIA failed after receiving a single bid well below the asking price, highlighting the challenges Pakistan faces in its privatization drive.
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