Pakistan International Airlines privatisation: Sole bidder offers only PKR 10bn for 60 pc share

Islamabad, Nov 2 (Representative) In a major setback, Islamabad’s attempt to privatise its national air carrier Pakistan International Airlines (PIA) attracted a single bidder who offered only PKR 10 billion as final price for a 60 percent share, against the government’s minimum rate of PKR 85 billion. The government’s first serious move to privatise its financially plagued airline fell through on Thursday, as the sole bidder was offering only 12 percent of the government’s stipulated price. In USD, this equates to a mere $36 million against a price of $305 million set by the Cabinet Committee on Privatisation, tribune.com.pk reported. The bidder; Blue World City – a real estate developer – refused to match the government’s minimum sale price of PKR 85.03 billion for the acquisition of 60% shares. The government televised the bidding process that did not last long due to participation of the single bidder in the process. Due to the huge difference between the expected and actual bids, the commission gave the consortium more time to reconsider its bid, though the Blue World City consortium chairman Saad Nazir refused to change the price, stating that “it was in accordance with our assessments.”

Speaking on the bid, Nazir said “We have considered the government price and decided to stand with our best price of PKR 10 billion”, later adding “If the government does not privatise PIA, we wish all the best for them, and if they want to run the airline themselves, we pray for them.” The Privatisation Commission explained that in the event of a sole bidder, and if the bid price was less than the government’s expectation, the commission could decide “whether to continue the bidding process” or request the bidder “to match its bid price with the minimum expectations” of the commission. If the bidder declines the commission’s request or submits a revised bid which is still lower than the expected price, the bidding process will stop, and the commission will ask the federal cabinet for approval, as per the rules, according to Dawn. The government’s efforts to privatise the once-lucrative airline – now turned into a loss-making machine – have not gone according to expectations whatsoever, as it had carved out approximately PKR 625 billion in PIA debt into a separate holding company, leaving PIA with PKR 202 billion in liabilities and about PKR 163 billion in assessed assets.