Pakistan International Airlines: The government of Pakistan has decided to completely sell Pakistan International Airlines (PIA). In fact, the only condition that the bidders have set for this is that after privatization, the government should not have any role in PIA and the entire managerial control should be in their hands.
Auction will be held on this day
Bidding for PIA will be held on December 23. Initially the government was planning to sell 75 percent shares in this loss-making national airline, but now the successful bidder will also be given the option to buy the remaining 25 percent shares at a 12 percent premium within a month.
This premium of 12 percent is being kept so that the buyer is given the option to make payment within a year instead of immediate payment. Officials told The Express Tribune newspaper that the government will receive only 7.5 percent of the bid amount in cash, while 92.5 percent will be directly reinvested in PIA to help it restart.
Who are among the bidders?
Privatization Commission officials said that the central government is selling 100 percent of its shares in PIA because all four bidders wanted that the government should not have any role in PIA after the deal. Prominent bidders include big business groups like Lucky Cement Consortium, Arif Habib Consortium, Fauji Foundation-owned Fauji Fertilizer and Air Blue.
Why did the government take this step?
Confirming this news of privatization, Prime Minister’s advisor Muhammad Ali said that all the bidders demanded at least 75 percent shareholding, while some demanded 100 percent ownership so that it would be easier to take decisions.
He further said that the main objective of the government is to revive PIA and bring it back to its old glory, for this huge investment is required in it. Earlier, Prime Minister Shehbaz Sharif had announced to sell only 60 percent stake in the airline, but it failed to attract buyers.
Government wooed buyers
Privatization officials said that to attract buyers, the government has put PIA’s debt of PkR 654 billion into a holding company, while PIA now has positive equity of PkR 30 billion. This year, PIA will get PkR 34.7 billion from the budget to pay off loans, pensions and medical expenses.
Even after the huge debt is cleared, the new owners will still have to pay PkR 26 billion in taxes and airport charges. PIA has 34 aircraft, of which only 18 are airworthy, but it has valuable landing slots and air service agreements with 97 countries, making it a valuable asset for bidders.
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