After receiving a meager offer of Rs10 billion from a single bidder, Federal Minister for Privatization Abdul Aleem Khan announced on Monday that the government will resume the bidding process for the privatization of the financially troubled Pakistan International Airlines (PIA).
Aleem informed senators on the PIA privatization initiatives during a meeting of the Senate Standing Committee on Privatization, which was presided over by Senator Talal Chaudhry.
He informed the group that although previous initiatives had encountered difficulties, such as a lack of buyer interest and bids that were much below the benchmark value, the government intended to issue new expressions of interest (EOIs).
The government had considered selling a significant portion of the national carrier, but investors withdrew; only Blue World City made a bid of Rs10 billion, compared to the minimum price of over Rs80 billion that was anticipated.
Despite calling the failed PIA privatization attempt a “setback” for the government, Finance Minister Muhammad Aurangzeb emphasized that the International Monetary Fund (IMF) had taken the government’s concerns seriously and that SOE privatization will proceed.
In addition to budgetary restrictions, the government is pushing for the privatization of loss-making SOEs since it is a requirement of the IMF, which has granted Pakistan a $7 billion loan.
The minister emphasized that previous bidding rounds had shown early enthusiasm from interested parties, but that enthusiasm never materialized. He emphasized that with the right restructuring, PIA might turn a profit.
“PIA operates valuable routes and can be developed into a profit-generating organization,” Aleem said.
He drew comparisons to Air India, pointing out that it took five unsuccessful efforts before its privatization was successful, highlighting the necessity of perseverance throughout the process.
