Key points
- PIA buyer must invest up to Rs70 billion
- Government to sell up to 100pc PIA stake
- Liabilities total Rs14.9 billion
ISLAMABAD: The government announced on Tuesday that the new buyer of Pakistan International Airlines (PIA) will need to invest up to Rs70 billion over five years to revive the loss-making national carrier.
However, the final investment figure will be determined once the audited financial accounts become available next month.
Usman Bajwa, Secretary of the Privatisation Commission, shared this during a Senate Standing Committee meeting on Privatisation, chaired by PML-N Senator Dr Afnan Ullah Khan. He said the investment would focus on financial recovery, operational improvements, and expanding the fleet, which currently averages 18.5 years in age.
Compared to the previous privatisation attempt, where the investment threshold was set at $300 million, the new estimate appears lower. Officials believe improved profitability, reinstated UK routes, and tax relief on leased aircraft may have reduced the projected cost, according to The Express Tribune.
Resuming flights
PIA is set to resume flights to Manchester from 14 August after the UK lifted its ban, initially imposed over concerns about pilots’ qualifications.
Adviser to the Prime Minister on Privatisation, Muhammad Ali, confirmed the full investment needs will be assessed after audited accounts for the financial year ending June are finalised.
The investor will retain 85 per cent of the bid amount for reinvestment, while the government will receive 15 per cent. The government plans to sell between 51 per cent and 100 per cent of PIA, including management control.
Officials stated the existing PIA business model is unsustainable. They noted that Rs45 billion in liabilities had recently been shifted to a holding company to improve the airline’s appeal.
Despite the previous failed bid of Rs10 billion against a minimum price of Rs85 billion, authorities believe the current process remains unaffected.
Reviewing pension concerns
The committee also reviewed pension concerns for 6,625 former employees, with total liabilities amounting to Rs14.9 billion. Senator Afnan expressed concern over the low pension amounts and requested a detailed breakdown at the next meeting.
Due diligence is now underway for pre-qualified bidders, including site visits and briefings on aircraft and routes.
Separately, senators questioned why Pakistan Minerals Development Corporation (PMDC) is being considered for privatisation, as the Petroleum Ministry lacks the authority to approve such a move.
Zarai Taraqiati Bank Limited (ZTBL) is included in the first phase of privatisation. However, the hiring of a financial adviser has been delayed due to a fee dispute, despite bids being submitted in January.
