The National Assembly Standing Committee on Privatisation was informed that the International Monetary Fund (IMF) has agreed to remove the 18% Goods and Services Tax (GST) on new aircraft acquisitions if Pakistan International Airlines (PIA) is privatised, aiming to attract private sector investment.
During the meeting of the National Assembly Standing Committee on Privatisation, chaired by Farooq Sattar, officials from the Privatisation Commission stated that the second attempt at PIA’s privatisation is fully prepared, with several returning bidders expressing interest.Â
The previous privatisation attempt failed in October last year when the sole bidder, Blue World City consortium, offered Rs10 billion for a 60% stake, far below the Privatisation Commission’s minimum expectation of Rs85.03 billion.
The committee was told that potential investors have raised concerns over the 18% GST on fleet expansion, arguing that removing the tax would facilitate aircraft acquisitions and boost the aviation industry’s growth. The government discussed the matter with the IMF, which agreed to eliminate the tax if PIA is privatised.
PIA’s liabilities currently stand at Rs45 billion, including Rs26 billion in outstanding taxes owed to the Federal Board of Revenue (FBR), Rs10 billion due to the Civil Aviation Authority (CAA), and pension liabilities making up the remainder. The government is developing a strategy to address these financial burdens, ensuring they do not deter potential buyers.
The committee was also informed that PIA’s non-core assets are not included in the bidding process. A separate policy is being formulated, and a consultant has provided multiple options to the Cabinet Committee on Privatisation (CCoP), which will decide on the best course of action.
Chairman Farooq Sattar emphasised the importance of job security for PIA employees, calling for protections for at least five years post-privatisation. The Privatisation Commission assured the committee that employee welfare remains a priority and will be finalised before the bidding process begins.
