Cabinet Committee Rejects Rs10bn Bid for PIA Stake

The recent developments surrounding the privatisation of Pakistan International Airlines Corporation Limited (PIACL) have stirred significant attention. The Cabinet Committee on Privatisation (CCOP) has officially endorsed the Privatisation Commission’s decision to reject a bid of Rs10 billion from Blue World City for a 60 per cent stake in the airline. This decision, made public on Friday, highlights the ongoing challenges faced by the government in its efforts to privatise state-owned enterprises.

On Wednesday, the Privatisation Commission’s board had already dismissed the sole bid from Blue World City, a real estate development company, and subsequently referred the matter to the CCOP for further evaluation. The bidding process, which took place last month, attracted only one bid, which was significantly lower than the government’s minimum price of Rs85 billion. This stark contrast between the expected and actual bid amounts raised concerns about the viability of the privatisation process.

Initially, six groups were prequalified to participate in the bidding, but only Blue World City submitted a proposal. In light of the substantial gap between the bid and the government’s expectations, the commission had extended an opportunity for the consortium to reconsider its offer. However, the chairman of Blue World City, Saad Nazir, chose to maintain the original bid amount.

During a meeting chaired by Deputy Prime Minister and Foreign Minister Ishaq Dar, the CCOP reaffirmed the government’s commitment to divesting PIACL, whether through privatisation or government-to-government (G2G) arrangements. The committee expressed satisfaction with the aviation division’s assessment of PIACL’s financial health, indicating a cautious optimism about the airline’s future.

In addition to addressing the bid for PIACL, the CCOP has also established a committee led by the minister of state for finance. This committee is tasked with exploring potential transaction options for the privatisation of PIA’s Roosevelt Hotel in the United States, which was leased to the New York City Administration for three years at a cost of $220 million last June. Furthermore, the committee has directed the resolution of all outstanding issues and the finalisation of an agreement for the sale of Services International Hotel before its next meeting.

The rejection of the bid for PIACL underscores the complexities involved in the privatisation of state-owned enterprises in Pakistan. While the government remains steadfast in its efforts to privatise PIACL, the significant gap between the bid and the expected price raises questions about the attractiveness of such investments. As the government navigates these challenges, it is crucial to foster an environment that encourages competitive bidding and attracts serious investors. The future of PIACL and its role in Pakistan’s aviation sector remains uncertain, but the government’s commitment to privatisation is clear.