Privatisation Commission recommends full divestment of PIA shares in second privatisation attempt

The Privatisation Commission has recommended selling between 51% to 100% of Pakistan International Airlines (PIA) shares in its second attempt to privatise the state-owned airline. 

According to news reports, the PC board, led by Advisor to the Prime Minister on Privatisation Muhammad Ali, has advised the Cabinet Committee on Privatisation (CCOP) to proceed with a full or majority divestment of PIA, including management control. 

This decision comes in response to a previous failed attempt, where potential investors showed little interest in partnering with the government due to concerns over its influence on the airline’s operations.

The government had previously agreed to offer at least 60% of PIA shares, but investors demanded a larger stake of up to 80% to 100%, seeking to run the airline without government interference. 

The first privatisation attempt was hindered by an inadequate scrutiny process, resulting in a real estate developer being selected as the sole bidder, offering far below the minimum asking price.

Prime Minister Shehbaz Sharif had earlier expressed dissatisfaction with the delays in reducing government size and instructed the Cabinet to expedite the process. The second attempt to privatise PIA will offer investors full control, but the final percentage of shares to be sold will depend on consultations with interested parties.

To avoid repeating past mistakes, the Privatisation Commission is currently gauging market sentiment, with plans to issue an Expression of Interest (EOI) by the end of March 2025. However, this deadline may be missed. The government aims to complete investor shortlisting and due diligence by mid-2025.

In addition to PIA’s privatisation, the board also reviewed options for privatising the Roosevelt Hotel Corporation in New York. 

The CCOP has instructed the Privatisation Commission to explore competitive bidding for the sale of the hotel, although the structure of the sale remains under review. 

The board is considering three options: an outright sale, a joint venture, or a 99-year lease, with the final proposal to be submitted for approval.