Addressing concerns of potential buyers for PIA privatization: Privatization Commission

Privatization Commission of Pakistan Regarding the ban on the national airline by the European Union Aviation Safety Agency (EASA). Pakistan International Airlines (PIA) Seeking to address the concerns of qualified procurement companies.

According to the news agency Reuters, the privatization of loss-making public enterprises has been going on for a long time International Monetary Fund (IMF) is on the list of recommendations for Pakistan as the country is already trying to reach an agreement with the international body for a long-term bailout package.

According to the Privatization Commission, six consortiums pre-qualified to bid for the PIA auction in June and the privatization of Pakistan International Airlines is expected to be completed by next month.

Privatization Commission Secretary Usman Bajwa told a briefing in Islamabad on Wednesday that the commission is addressing concerns expressed by eligible firms bidding for stakes ranging from 51 percent to 100 percent.

Previous governments have avoided this potentially hugely unpopular move despite huge deficits, but the government is now willing to take the sting out of more funding from the IMF.

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The European Union Aviation Safety Agency had banned PIA from the most profitable routes to Europe and the UK following the PIA plane crash in Karachi in 2020 when the aviation minister asked the pilots in Parliament. Fake licenses were revealed.

The current government has now told Parliament that the European agency’s ban has not yet lifted, costing the airline around Rs 40 billion in annual revenue.

Earlier in May this year, the Competition Commission of Pakistan (CCP) on behalf of the Government of Pakistan, in the ongoing process of privatization of the national carrier Pakistan International Airlines (PIA) through PIA Holding Company Limited (Holdco). A ‘Scheme of Arrangement’ was approved for acquisition of 100% shares of the company.

Holdco, a public limited company wholly owned by the Government of Pakistan, holds certain assets, liabilities and subsidiaries of PIA, including its businesses, properties, Rights and responsibilities have recently been established to address national and international issues.

PIA is a public listed company that provides aviation and related services such as engineering, handling, cargo, flight kitchen, and training.

According to CCP’s statement, the federal government had approved the transaction on February 6, 2024 based on the ‘Divestment of PIACL – Legal Separation Plan and Transaction Structure’ submitted by the Privatization Division which Under this, Holdco will acquire 100 percent of the shares of PIA and along with this the core assets and non-core liabilities of PIA will also be transferred to Holdco.

The relevant market identified in this case is the real estate market of Pakistan as PIA owns properties across the country with similar competitive conditions.