Tuesday February 27, 2024

PC signs deal with Ernst & Young to advise on PIA privatisation

November 29, 2023

ISLAMABAD: The Privatisation Commission on Tuesday formalised an agreement with a consortium led by British accounting firm Ernst & Young to provide financial advisory services for the divestment of the struggling Pakistan International Airlines Corporation (PIACL).

The agreement, which was signed in a ceremony attended by Minister for Privatisation Fawad Hasan Fawad, assigns the consortium the task of restructuring, legal, technical, and financial due diligence, along with the fair valuation of the PIACL.

Federal Minister for Privatisation, Fawad Hasan Fawad chairing a meeting with FA on FWBL on Nov 3, 2023. —APP
Federal Minister for Privatisation, Fawad Hasan Fawad chairing a meeting with FA on FWBL on Nov 3, 2023. —APP

The Ernst & Young led consortium was chosen as the financial advisor after an approval by the Privatisation Commission Board on November 10. Minister Fawad expressed confidence in the successful execution of the transaction, despite the challenging economic environment.

He stressed the commitment of all institutions involved to provide unwavering support to the financial advisor. The Minister assured seamless cooperation to facilitate their work, ensuring that the process unfolds in the best interests of all stakeholders.

Significantly, the Economic Coordination Committee (ECC) recently approved an Rs8 billion bridge financing package for the PIA, drawn from the resources of the Civil Aviation Authority (CAA) to settle outstanding payments.

Under the chairmanship of caretaker Finance Minister Dr Shamshad Akhtar, the ECC approved a bilateral arrangement between the CAA and the PIA. The Aviation Division's proposal for financial support through the CAA to address the airline's pressing needs has gained support.

Meanwhile, Minister Fawad chaired a meeting of the Privatisation Commission with HLB Ijaz Tabassum and Company, the financial advisor for the sale of identified properties owned or controlled by the federal government.

It is worth noting that in February 2020, the cabinet approved the sale of 27 properties owned and controlled by the government through the Privatisation Commission. In September 2020, a total of 23 properties were auctioned out in the first round of the auction, out of which the sale of 13 properties could not materialise later for various reasons. Currently, 17 properties remain unsold for which the services of the Financial Advisor were hired in December 2021.

The minister took serious note of shortcomings in the current process and directed the secretary, Privatisation Division, to review the process in consultation with the Financial Advisor. The minister further directed that the properties be re-evaluated, particularly with regard to the title and other possible reasons for the unsuccessful sale in the previous bidding process. He also directed that accountability should be established for delays and lapses within the Commission which have resulted in repeated failures of the auction process.