Govt to complete PIA privatisation by year-end after IMF clears Rs45bn liability settlement

The federal government aims to complete the privatisation of Pakistan International Airlines (PIA) by the end of this year after resolving the issue of Rs45 billion in liabilities with the International Monetary Fund’s (IMF) approval, the Privatisation Commission told the Senate Standing Committee on Privatisation on Thursday.

Secretary of the Privatisation Commission Usman Akhtar Bajwa briefed the committee, chaired by Senator Dr Afnanullah Khan, that the liabilities—mainly Rs26 to Rs27 billion in unpaid passenger tax dues to the Federal Board of Revenue (FBR)—had discouraged investors in previous bidding rounds. He said the IMF had now allowed the government to assume responsibility for these dues and had agreed to waive general sales tax (GST) on new aircraft purchases for the airline’s buyer to facilitate fleet modernisation.

Bajwa said four domestic business groups have been shortlisted for the transaction. The first consortium includes Lucky Cement, Hub Power Holdings, Kohat Cement, and Metro Ventures. The second comprises Arif Habib Corporation, Fatima Fertilizer, City Schools, and Lake City Holdings, while Fauji Fertilizer Company and Air Blue Limited are participating individually. 

He added that all stakeholders are evaluating PIA’s assets and liabilities, with the process expected to conclude by December 2025 after consensus on terms and conditions.

Committee members expressed concern over the lack of participation by leading international airlines. Bajwa explained that regional carriers were reluctant to acquire a competitor and that a weak PIA benefitted foreign airlines commercially. He noted that PIA had recently resumed its Manchester flights, with full bookings for the next four months.

On the Roosevelt Hotel in New York, Bajwa said that the financial advisory firm JLL had completed due diligence and recommended a joint venture structure with multiple exit options for the government. The cabinet approved the proposal in July, but the firm later withdrew due to a conflict of interest, prompting the government to hire a new financial advisor to proceed with the transaction.

The committee was also informed about the Precision Engineering Complex (PEC) transfer to the Pakistan Air Force (PAF). The complex, a defence-linked facility manufacturing aircraft parts and defence equipment, employs 223 workers and carries liabilities related to 381 retired staff. 

Officials said PEC generated Rs397 million in revenue this year, compared to expenditures of over Rs850 million. In line with a May 1 cabinet decision, ownership of PEC, along with its liabilities and assets, will be formally transferred to the PAF.

The panel also reviewed the outsourcing of landside services at Islamabad International Airport. Officials said a Turkish firm initially bid for the project but withdrew due to disagreements over revenue-sharing ratios. Negotiations are now under way for a government-to-government (G2G) agreement with the United Arab Emirates (UAE) for airport management.

Senator Afnanullah recommended outsourcing the airport’s operations to a reputable international company capable of efficient management and service delivery. 

He also commended the successful privatisation of First Women Bank Limited (FWBL), recently acquired by UAE-based International Holding Company (IHC), and directed authorities to address pension-related complaints of retired PIA employees promptly.