PIA Privatisation Stalls as Bidder Falls Short of Valuation

The government's plan to privatise Pakistan International Airlines (PIA) hit a hurdle when Blue World City, the sole bidder, offered significantly below the reserve price. The company's PKR 10 billion bid was only a fraction of the expected PKR 85.03 billion, marking a major setback in the privatisation efforts.

In a significant setback to the government's privatisation plans for Pakistan International Airlines (PIA), Blue World City—the only bidder—proposed a mere PKR 10 billion for a 60% stake, a figure far below the government's minimum sale price of PKR 85.03 billion, The Express Tribune reported.

The bid, amounting to roughly USD 36 million, starkly contrasts the set minimum of USD 305 million as determined by the Cabinet Committee on Privatisation. Notably, no government ministers were present at the bid announcement, which was attended only by two federal secretaries.

Despite being encouraged to match the government's minimum price, Blue World City, owned by Saad Nazir, refused to raise their PKR 10 billion offer. Five other pre-qualified parties withdrew before the bidding, citing stringent conditions on tax liabilities and investment guarantees.

Blue World City's participation highlights the lack of competition for the PIA sale. Chief Operating Officer Seham Raza expressed disappointment over the outcome, remarking the absence of competitive bidding. The government's strategy included restructuring PIA's immense debt load, leaving PKR 202 billion in liabilities and about PKR 163 billion in assets.

The government, offering between 51% to 100% stakes in PIA, settled on selling a 60% share, refusing requests for reduced taxes and requiring a substantial capital injection from bidders. Usman Bajwa, Secretary of the Privatisation Commission, emphasized that PIA needed significant investment to reach operational sustainability.

This unsuccessful privatisation attempt could impact the government's broader strategy to tackle economic challenges through selling state assets. (ANI)

(With inputs from agencies.)