In a turnaround, the government has decided to retain Ernst & Young (E&Y) for a renewed attempt at privatising Pakistan International Airlines (PIA), just two months after publicly criticising the firm for its handling of the previous privatisation bid. The decision was disclosed by Privatisation Secretary Usman Bajwa during a briefing to the National Assembly Standing Committee on Privatisation, as reported by The Express Tribune.
The government plans to issue fresh advertisements inviting bidders, hoping to attract broader interest. This comes after a failed attempt last year to sell PIA to a single bidder who offered Rs10 billion against the reserve price of Rs85.03 billion. At the time, no foreign entity came forward to lead a consortium, and dissatisfaction with E&Y’s performance was expressed by Privatisation Minister Abdul Aleem Khan.
PIA’s privatisation prospects have improved following the reopening of European routes and an IMF-backed decision to waive taxes on aircraft leases and inject Rs45 billion into the holding company. Bajwa confirmed that these measures aim to enhance the airline’s market value, making it more attractive to potential bidders.
However, previous bidders had raised significant demands, including a full exemption from the 18% sales tax on aircraft leases and the write-off of additional liabilities. Two serious contenders withdrew when these conditions were not met. Bajwa revealed that one bidder sought full management control without acquiring shares, while another proposed laying off permanent employees and rehiring them on contracts.
The standing committee, chaired by Muhammad Farooq Sattar of the Muttahida Qaumi Movement, also reviewed privatisation plans for other assets, including the Roosevelt Hotel in New York. Financial advisors proposed three options for the Roosevelt Hotel: outright sale, joint venture, or a 99-year lease. While an outright sale could take three years, the joint venture model might extend the process to nine years.
The committee also debated amendments to the Privatisation Commission Ordinance, rejecting proposals that would empower the prime minister to appoint Privatisation Commission board members and determine their remuneration. Legislators argued that such powers would compromise transparency and democratic principles.
Meanwhile, progress on the privatisation of the House Building Finance Corporation (HBFC) remains slow. Bajwa mentioned that the sole bidder’s terms would be reviewed by a cabinet body, though he acknowledged past delays and ongoing challenges tied to the country’s economic conditions.
These developments reflect the complex and often contentious nature of Pakistan’s privatisation efforts, where economic pressures and policy decisions continue to shape outcomes.
