ISLAMABAD, DEC 23 /DNA/: The privatisation process of Pakistan International Airlines (PIA) formally entered its bidding stage on Tuesday with three pre-qualified bidders submitting offers to acquire a majority stake in the national flag carrier.
The bidders included a consortium led by Lucky Cement Limited, comprising power producer Hub Power Holdings Limited, Kohat Cement Company Limited KOHC, and investment firm Metro Ventures.
A second consortium was led by Arif Habib Corporation Limited, comprising fertiliser maker Fatima Fertiliser Company Limited, private school network City Schools and real estate firm Lake City Holdings Limited. The third bidder was private airline Air Blue (Private) Ltd.
The auction is Pakistan’s second televised attempt at selling the once storied flag carrier after a bungled process last year drew only a solitary bid that fell far below the government’s reference price, derailing what would have been Pakistan’s first major privatisation in nearly two decades.
Representatives of the bidding groups walked in one by one on Tuesday to deposit sealed offers into a transparent box during the live broadcast, briefly fumbling as they pushed envelopes through the slot in a public ceremony broadcast on state television.
Bids for a majority stake in PIA are scheduled in two phases. A second open-bidding ceremony is set for later in the day, officials said.
“I am thankful to the ministers and head of the Privatisation Commission for making the process transparent,” Prime Minister Shehbaz Sharif said, calling on cabinet members to attend the second ceremony.
Meanwhile, Fauji Fertiliser Company Ltd, earlier viewed as a leading contender for the 75% stake in Pakistan International Airlines (PIA), had last week formally withdrawn from the privatisation bidding.
Of the amount paid for the 75% stake, 92.5% will be invested in PIA, while 7.5% will go to the government. The remaining 25% stake retained by the government is considered valuable, and bidders will have the option to acquire it later or leave it with the state.
Officials said the structure was designed to accommodate bidders interested in either 75% or full ownership. Those who do not participate in the bidding cannot later join the winning consortium, a restriction that no longer applies to Fauji Fertiliser now that it has formally withdrawn.
Under the payment terms, the winning bidder must pay two-thirds of the bid amount within 90 days, while the remaining one-third can be paid within 12 months.
The government has assured 12 months of job security for PIA employees. Pension liabilities, medical benefits, and other post-retirement perks will be handled by the holding company, while current salaries and benefits will be paid by the new owners.
PIA currently has rights to 78 destinations and holds about 170 landing slots worldwide. Officials said the airline urgently needs fresh investment and professional management to turn around its operations.
Last year, the government set a minimum price of $305 million for a 60% stake, but received a single bid of $36 million from real estate developer Blue World City, which declined to raise its offer, citing concerns over PIA’s finances and “significant leakages”.
PIA’s prospects have since improved. Islamabad has assumed most of the airline’s legacy debt, the carrier has posted its first pre-tax profit in two decades, and Britain and the European Union have lifted a five-year ban that had cut PIA off from its most lucrative routes.
The reopening of those routes could materially lift revenues and support a higher valuation than in last year’s failed auction, analysts and government officials have said.
The airline’s sale forms part of a broader privatisation push under Pakistan’s IMF bailout, which also includes plans to offload stakes in state-owned banks, power distribution companies and other loss-making enterprises as the government seeks to curb fiscal drain and restore investor confidence.
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