Bids for PIA privatisation to be invited next month

ISLAMABAD: The government will invite expressions of interest (EoIs) for the privatisation of Pakistan International Airlines (PIA) in early March, aiming to transfer the airline to private hands before the fiscal year ends, an official of the Privatisation Commission said Tuesday.

The previous attempt to privatize PIA faltered due to investor concerns, but key hurdles have now been cleared. The International Monetary Fund (IMF) has approved a waiver on the 18 per cent general sales tax for new aircraft purchases and allowed the government to absorb PIA’s Rs45 billion negative equity.

During a meeting of the National Assembly’s Standing Committee on Privatisation chaired by MNA Farooq Sattar, Secretary Usman Bajwa briefed lawmakers on the ongoing process and disclosed that $4.3 million of the $6.8 million advisory fee to Ernst & Young had already been paid. The remaining amount will be settled upon completion of the privatisation process.

The committee was also informed about PIA’s real estate holdings, including 26 properties under PIA Holdings and five under the airline itself. A prime plot in Islamabad’s Blue Area, valued at Rs10-12 billion, remains under review. Additionally, PIA Holdings possesses seven overseas properties, including Scribe Hotel in Paris and Roosevelt Hotel in New York, which are categorized as commercial properties. The Roosevelt Hotel’s current lease agreement will expire in May, and the process of vacating the property will commence with a three-month notice period.

Meanwhile, Pakistan Engineering Company (PECO) in Lahore, included in the privatization list last August, was also discussed. Secretary Bajwa informed that the company has no active production line and its staff consists of over 32 employees only. National Investment Trust (NIT) owns 23 per cent of shares which were bought from the open market. On the other hand, the Ministry of Industries was of the view that the transactions of these shares are not clear in the stock exchange. The representatives of private sector briefed the committee about the various problems and stated that PECO was a pride for Pakistan, Chinese and Japanese industrialists used to visit the company. In the 1960s the company was manufacturing aircraft parts as well. The members were informed that after the management of the private sector, the loss of the company decreased from Rs2 billion to only Rs700 million. The committee directed the privatization secretary to consult with the industries and law secretaries and submit a report within 40 days.