The first phase of the privatization process is completed; Lucky Cement, Airblue, Arif Habib in the race
Bidders submit sealed bids on Tuesday morning.
Three bids were made on Tuesday morning for a 75% stake in Pakistan International Airlines, with the first phase of the bidding process ending at 11.15.
“The first phase of the tender process has been completed; now the matter will go to the Privatization Commission,” said Privatization Commission (PC) Chairman Muhammad Ali.
The bids came from pre-certified bidders Lucky Cement, private airline Airblue and investment company Arif Habib. Fauji Fertiliser, among other bidders, has withdrawn from the competition.
The PC has received all bids by the December 22 deadline, and according to Muhammad Ali, the PC board will review and discuss PIA’s reserve price, the exact figure of which remains undisclosed. The government has stated that this privatization is vital to the financial health of the airline and aims to inject significant investment to steer the company towards profitability.
Ali emphasized that once the minimum price is approved by the board, it will be sent to the cabinet committee for final approval.
The PC board meeting is now in the process of determining the reference prices.
“This is a very important step,” Ali said. “No major privatization of a national asset has taken place in the last 20 years, making this move historic for Pakistan.”
The session resumes at 15.30 today. The Cabinet Committee’s approval of the reserve price will be the next major milestone.
Press for privatization
PIA, which has been operating at a loss for several years, has been a target for privatization by previous governments. The airline has struggled with mounting debt, aging fleets and an inability to keep pace with competitors. Previous attempts at privatization have faced obstacles, but the current administration appears determined to move forward with this reform.
New investors are required to commit to an investment of Rs80 billion over the next five years. Of the proceeds from the sale of 75% of PIA’s shares, 92.5% will be allocated to the airline for reinvestment, while the remaining 7.5% will be transferred to the state.
If a bid exceeds the minimum price, it will be opened. In the event of a lower bid, the highest bidder will be allowed to match the price. Once the successful bidder is identified, the bidder has 90 days to purchase the remaining 25% of the shares.
In a move to protect PIA’s workforce, the PC has stated that the job security of the employees will be guaranteed for one year. In addition, the holding company will be responsible for administering pension schemes and post-retirement benefits.
