In a significant development in Pakistan’s economic landscape, the privatisation bid for Pakistan International Airlines (PIA) has attracted notable interest from domestic and international entities, with several Chinese firms among the contenders.
According to a report by *The News*, Prime Minister Shehbaz Sharif-led government’s privatisation agenda has spurred various firms to submit Statements of Qualifications (SoQs) in pursuit of securing majority shares of PIA.
The list of contenders includes Fly Jinnah, Air Blue Limited, Arif Habib Corporation Limited, and Sardar Ashraf D Baluch – SHANXI CIG Co Ltd from China, alongside Gerry’s International (Private) Limited. Additionally, consortiums led by Y B Holdings (Private) Limited, Pak Ethanol, and Blue World City have also submitted SoQs, although the underlying companies forming these consortia remain undisclosed.
PM Shehbaz’s administration, doubling down on its commitment to privatise state-owned enterprises (SOEs), announced the decision irrespective of their financial standing, excluding strategic entities.
The move aligns with Pakistan’s agreement with the International Monetary Fund (IMF) for a $3 billion bailout in June 2023, amidst a deep economic crisis. PIA, burdened with liabilities exceeding 785 billion Pakistani rupees ($2.81 billion) and significant accumulated losses, has been a focal point of this restructuring effort.
Earlier this month, the Securities and Exchange Commission of Pakistan (SECP) approved the legal segregation of PIA’s non-core assets and liabilities to PIA Holding Company Limited, effective from April 30, 2024.
The Privatisation Commission, tasked with overseeing the bidding process, is set to commence the pre-qualification phase, adhering to the criteria outlined in the Request for Statements of Qualifications (RSOQs). Potential bidders will undergo thorough assessments before engaging in the bidding process, which will include investigations into PIA’s operations and finances.
A pre-bid conference will provide an avenue for investors to address concerns and seek clarifications before submitting bids. Following this, the Privatisation Commission Board (PCB) and the Cabinet Committee on Privatisation (CCoP) will approve the valuation for the majority stake sale.
Upon completion of the bidding process, the successful bidder will receive a Letter of Intent from the government, signaling the intent to proceed with the sale. The final sale agreement will be executed between the government and the successful bidder, culminating in the transfer of majority stakes in PIA and the government receiving proceeds from the sale.
As the privatisation journey unfolds, stakeholders remain attentive to the implications for PIA’s future and Pakistan’s broader economic landscape.
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