ISLAMABAD:
The government is set to auction 75% shares of Pakistan International Airlines on Tuesday in Islamabad, marking a significant step towards the airline’s privatisation. The successful bidder will be granted a 90-day window to purchase the remaining 25% of shares.
According to sources from the Privatisation Commission, the potential new investor is required to commit an investment of Rs80 billion over the next five years. Of the proceeds from the sale of 75% of PIA’s shares, 92.5% will be allocated to the airline for reinvestment, while the remaining 7.5% will be transferred to the government.
The Privatisation Commission’s board will first approve the reserve price, after which the Cabinet Committee on Privatisation will provide the final approval. Pre-qualified bidder groups are required to submit their bids between 10:45am and 11:15am on Tuesday. The sealed bids will be opened publicly at 3:30pm in the presence of the media.
If any bid exceeds the reserve price, it will be opened. In the event of a lower bid, the highest bidder will be given an opportunity to match the price. Once the successful bidder is identified, the bidder will have 90 days to purchase the remaining 25% of shares.
In a move to safeguard PIA’s workforce, the Privatisation Commission has stated that employee job security will be guaranteed for one year. Additionally, the holding company will be responsible for managing pension plans and post-retirement benefits.
Earlier, the government had decided to sell its 100% stake in PIA, but one-fourth of the shares will only be offered to the winning bidder at a 12% premium on the bid price, with an option to make the payment one year later.
The government also decided to take only 7.5% of the bid money in cash, while the bidder will invest the remaining 92.5% amount in the PIA company instead of depositing it in the exchequer, government officials told The Express Tribune. During the last failed attempt, the bidder had the option to pay 15% of the bid money in cash.
The decision to offload a 100% stake had been taken after bidders sought no role for the government in PIA’s affairs once the successful bidding takes place on December 23, according to Privatisation Commission officials.
