ISLAMABAD: The government’s initial attempt to privatise Pakistan International Airlines ( PIA ) faced a significant setback on Thursday, as the only bidder, Blue World City, proposed a mere PKR 10 billion for a 60 per cent stake in the loss-making airline–far below the government’s minimum sale price of PKR 85.03 billion, the Express Tribune reported.
During a officially televised selling event, Blue World City, a real estate designer, presented its present, which accounted for only 12 per cent of the president’s stated price.
In dollar terms, the charge equated to around USD 36 million, strongly comparing with the lowest price value of USD 305 million set by the Cabinet Committee on Privatisation.
Prior to the charge entry, the Privatisation Commission table and the Cabinet Committee convened individually, yet no state ministers attended the ceremony, which was only attended by two national secretaries.
Following recommendations from the Privatisation Commission committee, the Cabinet Committee had approved the lowest purchase price, but Blue World City was not interested in matching the government’s present.
Owner of Blue World City Saad Nazir, Saad Nazir, stated,” We have taken the government price into account and decided to stick with our best price of PKR 10 billion.” The firm was the only one to submit a bid after five other pre-qualified parties withdrew, citing the government’s strict conditions regarding tax liabilities, guaranteed investments, and employee retention, reported the Express Tribune.
The government’s efforts to privatise PIA, which ranks as the fourth-largest loss-making entity in the country, reached a disappointing conclusion as Blue World City was the only firm to participate. After separating PKR 625 billion in PIA debt into a separate holding company, leaving PIA with PKR 202 billion in liabilities and PKR 163 billion in assessed assets, the government had anticipated stronger interest.
Seham Raza, Chief Operating Officer of Blue World City, expressed disappointment over the lack of competition. She remarked,” I wished there had been healthy competition and feel sad that all other bidders have withdrawn.”
The government had offered a percentage of the airline’s ownership, with the government ultimately choosing to sell a 60 % stake. Additionally, it declined bidders ‘ requests for reduced duties and tax waivers and required the buyer to inject USD 500 million to USD 700 million into PIA to ensure operational sustainability, the Express Tribune reported.
Without new investments and the resolution of its outstanding liabilities, PIA would not be able to maintain its financial viability, according to Privatization Commission Secretary Usman Bajwa.
As the government attempts to address its financial challenges, the government’s failed privatization attempt may have wider implications.
