PIA Privatization Bid Rejected; New Expression of Interest Approved

PIA Privatization Bid Rejected; New Expression of Interest Approved

The head of the Privatisation Commission talked about why the first bid to sell Pakistan International Airlines (PIA) was turned down and what security the bidders had asked for.At a meeting of the Standing Committee on Privatisation of the National Assembly, the Secretary of the Privatisation Commission talked about why the first bid was turned down and what the bidders wanted.

Meeting Highlights

A committee member named Khawaja Shiraz Mahmood asked why only one buyer was left in the privatisation process. He also asked if the government was really interested in privatisation or if it was just putting on a show. Since PIA’s privatization was a mess, he said, there was now only one bidder for HBFCL (House Building Finance Corporation Limited).According to the Secretary of the Privatisation Commission, it was difficult to participate in the privatisation of HBFCL. Two bids were left at the end, but one could not meet the State Bank’s specs.

About privatizing the PIA

The Secretary of the Privatisation Commission made it clear that all parties interested in PIA had been given full information before the bidding process. At the last meeting before the bid, 11 important issues were talked over. Only two issues are still open. Instead of submitting a bid, one party wanted management control, another wanted all workers fired, and a third wanted GST relief for new planes to make the country more competitive on the world stage.Bidders also asked for changes to PIA’s liabilities, which were worth Rs. 191 billion, and their proposed changes would affect assets worth Rs. 141 billion. But because of the IMF program’s rules, the government wouldn’t offer any help. These two conditions were removed after talks with the IMF.

The Secretary also said that Europe had lifted the restrictions and that the government had agreed to send out a new expression of interest (EOI). The government is talking with investors now that the privatization process is moving faster.

Some more questions

Sahar Kamran, a member of the National Assembly, was worried about the costs of the privatization process and asked who would pay for them and what the Privatisation Commission’s job was.

Khawaja Shiraz Mahmood said that the privatization process must have a flaw that is stopping it from moving forward. Like the story of “Yusuf,” Farooq Sattar said that the privatization process would take time before it would bring any real value.

The Secretary of the Privatisation Commission said the prices would be given later, but he couldn’t give a number immediately. He also said that the PIA bids were made on October 31.