The government has decided to sell the Precision Engineering Complex (PEC), a business unit of Pakistan International Airlines (PIA), to the Pakistan Air Force (PAF) for Rs6.5 billion. The transaction includes Rs2.5 billion in cash and Rs4 billion in employee-related liabilities, The Express Tribune reported, citing government officials.
A ministerial committee has already approved the transfer of the Precision Engineering Complex to the Pakistan Air Force for a total price of Rs6.5 billion. A formal summary is now being prepared for federal cabinet approval.
The transaction structure was approved by a four-member ministerial committee chaired by Finance Minister Muhammad Aurangzeb, with members including the ministers for defense, aviation, and privatization.
A sub-committee evaluated PEC’s assets and liabilities to finalize the deal. PAF will establish a special-purpose vehicle to manage PEC’s operations and ensure financial stability.
Precision Engineering Complex, which manufactures high-precision parts for the aerospace and other industries, has already been separated from PIA’s core operations. It is among the non-core assets transferred to the PIA holding company, which also carries Rs623 billion in liabilities of the national flag carrier.
As of December last year, PEC’s total assets were valued at Rs1.2 billion, while its liabilities stood at Rs2.9 billion, resulting in a net negative equity of Rs1.73 billion.
The sale price of Rs6.5 billion, determined under the discounted cash flow method, includes land, infrastructure, machinery, equipment, and human resources.
Under the deal, PAF will pay Rs2.5 billion in cash over five years and assume Rs3 billion in pension and provident fund liabilities for 259 retired employees over the next decade.
An additional Rs1.1 billion in employee obligations for 251 current employees will also be transferred to PAF. Employee contracts will remain unchanged, with pay, allowances, medical services, and pension benefits intact.
The government previously attempted to privatize PIA in October but failed after five of six shortlisted bidders withdrew. The sole remaining bidder, a real estate developer, offered Rs10 billion for a 60% stake against a minimum reserve price of Rs85.03 billion. Disputes over tax liabilities and bridge financing led to the failure of the transaction.
Despite these challenges, the government secured the Rs2.5 billion cash deal for PEC, which includes Rs199 million in property and equipment, Rs742 million in trade receivables, and Rs93 million in cash deposits. Liabilities include Rs1.1 billion in employee obligations and Rs1.8 billion in trade payables.
The sale is seen as part of broader efforts to restructure PIA by divesting its non-core assets and addressing its financial challenges.
The news is differently reported when PAF is paying and buying PIA assets it means public money is used to buy public assets.
It means it will remain property of public and shall be run under tough Accountability. It never means Air chief or anyone else in organization can take decisions against people and nations interest but is accountable for all decisions and actions.
Good move things must improve that is only option.
Alhamdolilah