Govt approves criteria for buyers to acquire majority stakes in PIA

The government approved the criteria for potential buyers to acquire majority stakes in Pakistan International Airlines (PIA), setting the net worth requirement at a minimum of Rs30 billion or $100 million.

According to a news report, the Privatisation Commission’s board ratified the prequalification criteria for bidders and established a prequalification committee, led by Privatisation Minister Abdul Aleem Khan. 

This occurred on the same day the government opened bidding for 51% to 100% stakes in PIA, setting a May 3rd deadline for investors’ Statements of Qualification submissions. 

The commission issued the Expression of Interest and the draft Request for Statement of Qualification (RSOQ) to attract investors for divesting up to 100% shares.

Financially, a bidder must have a net worth of at least Rs30 billion or $100 million, per the board’s approved criteria. 

For consortium bids, the collective net worth must be Rs30 billion, with the lead bidder possessing at least Rs8 billion or $25 million. 

Additionally, non-airline enterprises in the bidding consortium must have an annual revenue of at least Rs200 billion or $700 million.

Currently, the government owns around 96% of PIA’s total issued shares and plans to sell this loss-making entity by June. 

Foreign-owned airlines cannot acquire majority stakes in Pakistani airlines due to the Pakistan Civil Aviation Act and regulations, necessitating foreign investors to collaborate with local counterparts for bidding.

In preparation for privatisation, the government is clearing the airline of legacy loans through a segregation scheme and Scheme of Arrangement. 

A new PIA Holding Company was approved to become the parent entity of the existing Pakistan International Airlines Company (PIACL), which will retain core assets, liabilities, staff, and rights under operational agreements, including air service and code sharing agreements, fuel supply, passenger sales, and foreign loans.