The Ministerial Committee on Privatization (CCoP) on Thursday reaffirmed its commitment to divestment of Pakistan International Airlines (PIA) while mentioning the government-to-government (G2G) option for the first time.
The shift comes after the committee rejected a Rs10 billion bid from the Blue World City consortium, which did not meet the minimum target of Rs85 billion set by the Privatization Commission.
The G2G approach typically involves direct transactions between the federal government of Pakistan and foreign governments or state-backed entities.
By considering this situation, the government aims to secure a strategic investment that transcends the volatility of private bidding and provides stable, long-term benefits. This alternative could also attract the interest of foreign state-owned companies that view Pakistan’s aviation sector as a strategic opportunity.
The CCoP, headed by Deputy Prime Minister Ishaq Dar, stressed the need for a divestment process that complies with legal provisions and maintains transparency. The G2G model could provide Pakistan with more control over the deal, helping to avoid undervaluing PIA, which remains a sensitive national asset.
In addition, such partnerships could be aligned with the financial reform goals of Pakistan’s $7 billion IMF program, which includes mandates to restructure state-owned enterprises.
Minister of State for Finance Ali Parvez Malik has been tasked with leading a new committee to evaluate transaction options for both PIA and the Roosevelt Hotel in New York. This review will assess the feasibility and strategic value of G2G and other privatization approaches, with the aim of balancing economic returns with national interests.
CCoP’s decision to explore G2G comes amid challenges in attracting private sector interest in PIA. Despite pre-qualifying six groups earlier this year, only Blue World City made a bid, which fell well below expectations.
This has prompted the government to consider alternative paths to achieve privatization goals without selling critical assets at undervalue.
The government-to-government model reflects a nuanced approach to privatization, blending foreign government partnerships with national oversight. This development represents a potential shift in the privatization framework in Pakistan, with the aim of achieving sustainable investment in the PIA region while maintaining its strategic importance.