Government speeds up PIA privatisation

ISLAMABAD: The government has accelerated the privatisation process of Pakistan International Airlines (PIA), moving the financial closure deadline up to June 1, 2025 - four months earlier than the previously planned October timeline.

The decision, spearheaded by Prime Minister Shehbaz Sharif, is part of broader economic reforms designed to reduce the state’s financial burden and enhance the efficiency of state-owned enterprises (SOEs).

‘The News’ tried to reach out to the Privatisation Division secretary and sent him questions for confirmation, but he did not reply. However, another senior official of the commission confirmed that the Privatisation Division has been directed by the premier to revise the implementation roadmap to June 2025.

In a significant boost to the process, the International Monetary Fund (IMF) has also agreed to waive the 18 percent General Sales Tax (GST) on new aircraft acquisitions once PIA transitions to private ownership.

The government is also formulating a strategy to manage these financial challenges, especially the Rs45 billion negative equity, which the IMF has allowed to be absorbed by the government and offer a clean balance sheet as to make the airline more attractive to investors. This 45 billion comprises Rs26 billion FBR taxes, Rs10 billion Civil Aviation charges and remaining as pension liabilities.

Since most of the work, including due diligence and financial assessments, was completed during the previous attempt, the process would not take much time, and the transaction is expected to be finalised by the new deadline, the official said.

“Hopefully, the government would issue an Expression of Interest (EoI) by end of this month or start of next month for the national flag-carrier privatisation,” he said. The government has re-assigned financial advisory for the transaction to British multinational Ernst & Young (E&Y).

Notably, the previous privatisation attempt collapsed in October 2024 when the only bidder, Blue World City consortium, offered Rs10 billion for a 60 percent stake-far below the Privatisation Commission’s minimum expectation of Rs85.03 billion.

The government is also moving and working on to reopen direct flight routes to the United States. Security audits will be conducted in collaboration with the US Federal Aviation Administration (FAA), with American aviation experts expected to visit Pakistan in March or April 2025.