The Cabinet Committee on Privatisation (CCoP) on Thursday reaffirmed its commitment to divesting Pakistan International Airlines (PIA) while mentioning a government-to-government (G2G) option for the first time.
This 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 Privatisation Commission.
The G2G approach typically involves direct transactions between Pakistan’s federal government and foreign governments or state-backed entities.
By considering this mode, the government aims to secure a strategic investment that bypasses the volatility of private bids and provides stable, long-term benefits. This alternative could also attract interest from foreign state-owned enterprises that view Pakistan’s aviation sector as a strategic opportunity.
Chaired by Deputy Prime Minister Ishaq Dar, the CCoP emphasised the need for a divestment process that complies with legal provisions and maintains transparency. This G2G model could offer Pakistan more control over the transaction, helping avoid undervaluation of PIA, which remains a sensitive national asset.
Additionally, such partnerships could align with the fiscal reform objectives of Pakistan’s $7 billion IMF program, which includes mandates for restructuring state-owned enterprises.
Minister of State for Finance Ali Pervaiz Malik has been tasked with leading a new committee to assess transaction options for both PIA and the Roosevelt Hotel in New York. This review will evaluate the feasibility and strategic value of G2G and other privatisation modes, aiming to balance economic returns with national interests.
The 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 placed a bid, which was substantially below expectations.
This has prompted the government to consider alternate paths to meet its privatisation goals without underselling vital assets.
The G2G model reflects a nuanced approach to privatisation, blending foreign government partnerships with national oversight. This development marks a potential shift in Pakistan’s privatisation framework, aiming to achieve sustainable investment in PIA while preserving its strategic significance.
