Federal Minister for Privatization: New Bids for PIA Privatization to Be Invited

Federal Minister for Privatization Abdul Aleem Khan has announced that new bids will be invited for the privatization of Pakistan International Airlines (PIA). During a meeting of the Senate Standing Committee on Privatization, chaired by Senator Talal Chaudhry, Khan provided updates on the privatization efforts and discussed the challenges encountered, including a lack of buyer interest and bids falling significantly below the benchmark.

Khan highlighted the following key points during the briefing:

1. Financial Challenges:
   • PIA’s total losses currently stand at Rs. 830 billion, with Rs. 45 billion in losses recorded at the time of the initial privatization attempt.
2. Past and Future Privatization Efforts:
   • Efforts to privatize PIA had begun during Khan’s tenure as minister, but the process faced hurdles due to insufficient offers and buyers’ lack of confidence.
   • A re-privatization initiative is now underway, with the active involvement of Prime Minister Shahbaz Sharif.
3. Global Comparisons and Profitability Potential:
   • Drawing parallels to Air India’s privatization, Khan emphasized that privatization could succeed if approached with determination, suggesting that PIA has the potential to become a profitable entity given its advantageous routes.
4. Tax and Policy Adjustments:
   • Khan recommended the Federal Board of Revenue (FBR) remove GST on new aircraft purchases, aligning with global practices to make PIA more attractive to investors.
5. Investor Concerns:
   • Investors had requested waivers of Rs. 26 billion in taxes and sought a commitment for the government to cover financing of Rs. 10 billion, which became points of contention in the earlier attempts.

Khan emphasized the need for immediate and decisive action, urging the government to address public sector losses before proceeding with privatization. He called for inter-ministerial cooperation to ensure the process’s success, adding that privatization requires a “big heart” to move forward effectively.