The government’s initial attempt to privatise Pakistan International Airlines (PIA) faced a significant setback on Thursday, as the only bidder, Blue World City, proposed a mere PKR 10 billion for a 60% stake in the loss-making airline–far below the government’s minimum sale price of PKR 85.03 billion, the Express Tribune reported.
During a publicly televised bidding event, Blue World City, a real estate developer, presented its offer, which accounted for only 12 per cent of the government’s stipulated price.
In dollar terms, the bid equated to approximately USD 36 million, starkly contrasting with the minimum sale price of USD 305 million set by the Cabinet Committee on Privatisation.
Prior to the bid opening, the Privatisation Commission board and the Cabinet Committee convened separately, yet no government ministers attended the ceremony, which was only attended by two federal secretaries.
The Cabinet Committee had approved the minimum sale price following recommendations from the Privatisation Commission board, and despite being invited to match the government’s offer, Blue World City declined to raise its bid.
“We have considered the government price and decided to stand with our best price of PKR 10 billion,” stated Saad Nazir, the owner of Blue World City. The firm was the only one to submit a bid after five other pre-qualified parties withdrew, citing the government’s strict conditions regarding tax liabilities, guaranteed investments, and employee retention, reported the Express Tribune.
The government’s efforts to privatise PIA, which ranks as the fourth-largest loss-making entity in the country, reached a disappointing conclusion as Blue World City was the only firm to participate. The government had anticipated stronger interest, especially after it carved out approximately PKR 625 billion in PIA debt into a separate holding company, leaving PIA with PKR 202 billion in liabilities and about PKR 163 billion in assessed assets.
Seham Raza, Chief Operating Officer of Blue World City, expressed disappointment over the lack of competition. “I wished there would have been healthy competition and feel sad that all other bidders have pulled out,” she remarked.
The government had offered between 51 per cent to 100 per cent stakes in the airline but ultimately decided to sell a 60 per cent share. Additionally, it declined bidders’ requests for reduced duties and tax waivers and required the buyer to inject USD 500 million to USD 700 million into PIA to ensure operational sustainability, the Express Tribune reported.
Privatisation Commission secretary Usman Bajwa highlighted that PIA would not achieve operational sustainability without new investments and resolution of its outstanding liabilities.
The failed attempt to privatise PIA may have broader implications for the government’s overall privatisation strategy as it seeks to address its financial challenges.
