Pakistan sells loss-making PIA for Rs 135 billion after competitive bidding
The ceremony for the privatization of Pakistan International Airlines (PIA) was held in Islamabad, where three pre-qualifiers, including Lucky Cement, private airline Airblue and investment firm Arif Habib, placed their sealed bids in a transparent box.
Bids were opened in the second stage of the ceremony; Arif Habib made the highest bid by offering Rs 115 billion, followed by Lucky Cement with Rs 105.5 billion and Airblue with Rs 26.5 billion to acquire the airline.
After the tender was opened, the government announced that the reference price was 100 billion Rupees. According to the rules, the two highest bidders were offered the opportunity to compete in the opening bidding process.
Both Arif Habib and Lucky Cement competed fiercely to win the airline and increased the bid money step by step, until the Arif Habib group offered Rs 135 billion, which went unopposed.
A member of Lucky Cement said, “We congratulate Arif Habib group,” while accepting his rival’s big offer.
The government was initially offering a 75 percent stake, but the successful bidder would have 90 days to buy the remaining 25 percent. According to the rules, 92.5 percent of the sales proceeds from the sale of the first 75 percent of PIA’s shares will be allocated to the airline for reinvestment, while the remaining 7.5 percent will be transferred to the government.
The investor will also have to commit to an investment of Rs 80 billion over the next five years. Earlier, the government had taken responsibility for PIA’s liabilities amounting to Rs 654 billion last year.
To ensure transparency, the entire tender process was shown live on local television.
The auction was the airline’s second attempt to sell, following its first attempt last year that failed to attract the asking price.
Earlier, Prime Minister Shehbaz Sharif, in his speech at the federal cabinet meeting, thanked government officials and the Privatization Commission for their role in the privatization of the national airline.
He stressed that the process has been made “transparent”, stating that it will be the “largest transaction” ever in Pakistan’s history.
PIA was once the world’s leading airline, but years of mismanagement damaged its services and reputation, eventually leaving the government no choice but to sell it.
