Pakistan's PIA Privatization Fails: Sole Bidder Offers Less Than Minimum

Islamabad, Oct 31 (PTI) Pakistan's effort to privatise its national flag-carrier on Thursday received a lukewarm response with a lone bidder offering just Rs 10 billion for a 60 per cent stake, well below the government-set minimum price of Rs 85 billion.

The bidding ceremony to sell the Pakistan International Airlines (PIA) was held at a hotel in Islamabad and shown live on the state-run PTV channel.

The move to sell the PIA and other loss-making state-owned enterprises is part of the deal with the International Monetary Fund (IMF) that recently agreed to provide USD 7 billion to Pakistan.

The government had pre-qualified six groups in June, but only a real-estate development company, Blue World City, participated in the final bidding process.

The Privatisation Commission said it had asked the bidder to match the minimum bid.

Blue World City chairman Saad Nazir, however, stood by his bid. “We wish the government all the best if they don't want to accept our bid,” he said.

Pakistan was looking to offload a 51-100 per cent stake in debt-ridden PIA to raise funds and reform state-owned enterprises but the bid showed that the process may be a non-starter.

PIA's owned assets are worth approximately PKR 152 billion, including aircraft and operational routes. But it has around 7,100 employees, with over 2,400 working on a daily wage basis, who had been a hindrance in its privatisation.

But it is making losses, owes billions of rupees in debt and its fleet is aging and any investor would have to make substantial investment to make it a profit-making entity, experts from the sector said.