Pakistan’s big decision amid economic crisis, Pakistan’s government airline PIA sold for Rs 135 billion

Tezzbuzz Desk- Pakistan’s economy is going through a deep crisis. Economic relief from the International Monetary Fund (IMF) and friendly countries has also failed to stabilize the situation. Amidst this pressure, the Shehbaz Sharif government had to take a historic and controversial step—privatization of the country’s national airline Pakistan International Airlines (PIA).

On Tuesday, the Pakistan government successfully completed the process of selling 75 percent stake in PIA. The deal was awarded to a local investment group led by industrialist Arif Habib Group for Pakistani rupee 135 billion.

The formal process of privatization of PIA was held in Islamabad. Three pre-qualified groups participated in the bidding – Lucky Cement, private airline Airblue, Arif Habib Group. All the companies submitted their sealed bids in a transparent box. When the bids were opened in the second phase, Arif Habib Group came out with the highest bid.

The government had fixed a reference price of Rs 100 billion for the loss-making PIA. Under the rules, there was a competition between two parties with the highest bidder. There was a tough competition between Lucky Cement and Arif Habib Group, but when the bid reached Rs 135 billion, the representative of Lucky Cement stepped back and congratulated Arif Habib Group.

According to the government plan-

75% stake was sold in the initial phase.

The investor will get 90 days to buy the remaining 25% stake.

92.5% of the proceeds from the sale of 75% stake will be used for restructuring and investment in PIA.

Only 7.5% of the amount will go to the government’s account.

Apart from this, the investor will also have to make an additional investment of Rs 80 billion in the next 5 years.

To ensure transparency, the government broadcast the entire bidding process live on local television channels. This was the second attempt to privatize PIA. Earlier last year also such an attempt was made, but due to lack of proper price the deal had to be cancelled.

Prime Minister Shehbaz Sharif praised the Privatization Commission and government officials for making the process a success, calling it an “important step towards economic recovery” for the country.

There was a time when PIA was counted among the best airlines in the world. It was among the first airlines to fly on many international routes but years of mismanagement, political interference, rising debt and deteriorating services pushed this national heritage into huge losses. The situation became such that the government was left with no practical option other than selling it.