PIA privatisation process is set to reach its final phase by 1 October 2024, according to Privatisation Commission Secretary Usman Bajwa. Addressing the Senate Standing Committee on Privatisation on Thursday, Usman Bajwa confirmed that the deadline for PIA privatisation will not be extended beyond this date.
For years, the government has injected billions of dollars into struggling state-owned enterprises (SOEs) to keep them operational. As part of a $3 billion bailout deal with the International Monetary Fund (IMF) in June 2023, Islamabad agreed to overhaul loss-making SOEs, with PIA privatisation emerging as a top priority due to its massive financial losses. These losses, which amount to billions of rupees annually, have made PIA privatisation an urgent necessity for the current government.
During the committee meeting, Usman Bajwa emphasized that the PIA privatisation process is on track, with six companies shortlisted for bidding. However, he cautioned that if the “due diligence” process for these interested companies is not completed on time, the bidding phase may need to be extended.
“Whoever acquires PIA will need to inject Rs425 billion immediately to ensure its smooth operation,” Usman Bajwa stated, noting that the airline’s deficit has ballooned to Rs500 billion.
Previously, the federal government granted a two-month extension for the PIA privatisation due diligence period, now concluding on October 1, 2024. This extension, requested by several bidding parties, also includes a proposal from the Privatisation Commission for the winning bidder to retain existing employees for up to three years.
Since February 2015, PIA has accumulated losses of Rs599 billion (US$3.34 billion), with Rs75-80 billion in losses recorded last year alone, as disclosed by Jawad Paul, Secretary of the Privatisation Division. He further informed the National Assembly’s Standing Committee on Privatisation that four out of six interested bidders had requested extensions ranging from 60 days to six months, leading to the current two-month extension.
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In June 2024, pre-qualified bidders conducted site visits to PIA’s facilities in Karachi, followed by a series of pre-bid meetings in July and August 2024. These steps are part of a rigorous process leading up to the final bidding, which will be live-streamed to ensure transparency. Once due diligence is completed, the government plans to finalise bidding documents and seek approvals from the Cabinet Committee on Privatisation (CCoP) and the federal cabinet before signing and awarding contracts.
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The meeting also revealed that the financial adviser hired to oversee the PIA privatisation process was paid billions despite the process being temporarily halted. Secretary Usman Bajwa noted that while the Haveli Bahadur Shah and Balloki power plants were removed from the privatisation list, the financial adviser still received Rs330 million and Rs130 million for work on the National Power Park Company and Pakistan Steel Mills, respectively. Additionally, Rs7 million was allocated to the adviser for the suspended privatisation of Jinnah Convention Centre.
