ISLAMABAD: Pakistan International Airlines (PIA) has attracted Rs10 billion from the sole bidder for a stake in the national carrier for the expected minimum price of Rs85 billion.
The government had pre-qualified six groups in June, but only one – real estate developer Blue World City – participated in the bidding process, submitting a bid below the government’s minimum price of PKR 85 billion.
The development comes as Prime Minister Shehbaz Sharif’s administration looks to dispose of a 51-100% stake in the debt-laden airline to raise funds and reform the depleted state-owned enterprises (SOEs) as stipulated in the IMF’s $7 programme. Billions of dollars.
The Privatization Commission said that it had asked the bidder to match the minimum offer.
However, the submitting company stood by its offer, saying: “We wish the government all the best if it does not want to accept our offer.”
The bidding process was previously postponed by one month and has been rescheduled from October 1 to October 31 (today).
Three groups chose not to submit bids, officials said Reuters On the condition of anonymity, there are concerns about the government’s ability to adhere to agreements made regarding the national carrier in the long term.
One executive expressed concern about policy continuity once a new government is formed. Prime Minister Shehbaz Sharif’s government relied on a coalition of disparate political parties.
Getting rid of PIA is a move that previous governments have shied away from because it was not very popular given the number of layoffs it would likely result.
These concerns about policy continuity and respect for contracts are supported by the government’s termination of power purchase contracts with five private companies earlier this month, in addition to the process of renegotiating other secured sovereign agreements.
Changes to Pakistan’s decade-old agreements with private independent power projects, largely financed by foreign lenders, to address chronic energy shortages, “increase the risks of investing as well as doing business in Pakistan, even with sovereign contracts in place.” As well as guarantees. said Saquib Shirani, an economist who heads a private company called Macroeconomic Insights.
Other concerns raised by potential bidders included inconsistent government communications, unattractive terms and taxes on the sector, as well as issues related to PIA’s legacy and reputation.