Islamabad, November 18, 2024- Federal Minister for Privatization Abdul Aleem Khan has announced that the government is set to relaunch the bidding process for Pakistan International Airlines (PIA), aiming to revitalize the privatization of the financially struggling national carrier. This decision follows an underwhelming offer of Rs10 billion from a sole bidder, far below the minimum expected value of Rs80 billion.
The announcement was made during a meeting of the Senate Standing Committee on Privatization, chaired by Senator Talal Chaudhry on Monday. Briefing the committee, Aleem Khan stated that the government plans to invite fresh expressions of interest (EOIs) after earlier efforts were hindered by low buyer interest and bids falling short of the benchmark value.
The government’s initial privatization attempt saw limited investor participation, with only Blue World City submitting a bid. Finance Minister Muhammad Aurangzeb described the outcome as a “setback” but reaffirmed the government’s commitment to privatizing state-owned enterprises (SOEs), a key condition for the $7 billion loan approved by the International Monetary Fund (IMF).
Aleem Khan highlighted PIA’s potential to become a profitable entity through effective restructuring. “PIA operates lucrative routes and has the capacity to transform into a profit-generating institution,” he said. Drawing a comparison with Air India’s privatization, which succeeded after five failed attempts, he stressed the importance of persistence.
He also criticized the Federal Board of Revenue (FBR) for imposing GST on aircraft purchases, a tax he claimed is not globally practiced in this manner. “I urged the FBR to waive GST on new aircraft purchases, but they remain inflexible. This tax significantly raises acquisition costs,” he said, calling for resolution of such financial hurdles to facilitate the privatization process.
Aleem further emphasized the need to address PIA’s financial liabilities before its privatization. The secretary of the Privatization Commission revealed that investors had requested Rs26 billion in tax waivers and committed to financing Rs10 billion in liabilities.
