The cash-strapped country is selling between 51 and 100 percent of its stake in debt-ridden Pakistan International Airlines to raise funds and revamp the loss-making state-owned enterprise planned under a $7 billion International Monetary Fund program.
The Ministry of Privatization announced that the process will begin at 1:30 pm (8:30 pm Japan time) and bidding will begin at 6:30 pm in Islamabad.
The government pre-qualified six groups in June, but only one company, real estate developer Blue World City, met Tuesday’s deadline to submit final documents to participate in the process. .
Officials from the three organizations that withdrew the bids told Reuters on condition of anonymity that they were concerned about the government’s ability to honor its agreements with flag carriers in the long term.
One senior official expressed concerns about the continuity of the policy after the new government takes office. Prime Minister Shehbaz Sharif’s government relies on a disparate coalition of political parties. Punishing the PIA was a measure avoided by previous governments because it was highly unpopular given the number of redundancies it would cause. Underlying these concerns about policy continuity and contract enforcement were the government’s termination of power purchase agreements with five private companies earlier this month, as well as the process of renegotiating other sovereign guarantee agreements. .
To deal with chronic power shortages, Pakistan’s decade-old agreements with private IPP projects, mostly financed by foreign financiers, have been changed to ensure that “even with government contracts and guarantees, no Investment and business risks are increasing,” said Saqib Sherani, an economist who heads the private firm Macro Economic Insights.
Other concerns raised by potential bidders included inconsistent government communication, unattractive terms and taxes on the sector, along with PIA’s legacy issues and reputation.
