The privatisation commission (PC) has announced that it is “fully prepared” for a second attempt at privatising Pakistan International Airlines (PIA), with several returning bidders and parties involved in the process.
This update came during the 6th meeting of the National Assembly’s Standing Committee on Privatisation, chaired by Dr Farooq Sattar, on Monday.
The commission briefed the committee on the progress of PIA’s privatisation, emphasising that this second attempt would build upon lessons learned from last year’s failed attempt.
In October 2024, the government’s initial plan to privatise the national carrier fell through after the only bidder, Blue World City consortium, refused to meet the Privatisation Commission’s minimum expectation of Rs85.03 billion. Instead, the consortium offered just Rs10 billion for a 60% stake in the airline.
Following this setback, the government now plans to initiate a fresh process for the sale of PIA, with updated strategies to attract new bidders.
One of the key recommendations presented during the meeting was a proposal to waive the 18% Goods and Services Tax (GST) imposed by the government on the induction of new planes and fleet expansion.
Bidders suggested that removing the GST would stimulate private sector investment in new aircraft and aid the growth of Pakistan’s aviation industry.
The committee was informed that the government had raised this issue with the International Monetary Fund (IMF), which agreed to remove the tax if PIA is privatised. This move is expected to encourage investment in the airline’s fleet.
Furthermore, the committee discussed the liabilities of PIA, which amount to Rs45 billion. These liabilities include Rs26 billion in taxes owed to the Federal Board of Revenue, Rs10 billion owed to the Civil Aviation Authority (CAA), and pension liabilities.
The government plans to devise a mechanism to address these outstanding liabilities to ensure they do not deter potential investors.
The committee also clarified that non-core assets of PIA would not be included in the privatisation bidding process. A separate policy for these assets is being formulated, with a consultant already hired to propose options to the Cabinet Committee on Privatisation.
In a previous meeting, it was revealed that the IMF had agreed to clear the Rs45 billion negative equity of Pakistan International Airlines Company Limited (PIACL), which is a significant step towards revitalising the airline and facilitating the privatization process.
Additionally, the committee discussed the Privatisation Commission (Amendment) Bill 2024, raising concerns over Clause 4, Section 7(4), which grants the prime minister the authority to make privatization decisions instead of the cabinet.
The committee has asked the Ministry of Law to clarify whether there is any precedent for this provision and deferred the bill until further details are provided in the next meeting.
