Why delay in PIA auction process despite giving date?

Pakistan’s Deputy Prime Minister Ishaq Dar has said that Pakistan International Airlines (PIA) of 30 days in the bidding process for the auction delay has happened

In a statement late last night, he attributed the delay to potential bidders ‘requesting more information and time’ to evaluate the airline.

But why is the privatization process being delayed? Independent Urdu has spoken to various government officials and experts to find out the reason.

The spokesperson of the Ministry of Privatization, Ahsan Ishaq, has told Independent Urdu that ‘the bidding for the privatization of Pakistan International Airlines has been rescheduled to October 31.’ However, the spokesperson has not given any reason for this.

On the other hand, an official of the Ministry of Privatization has told Independent Urdu that the privatization process has been delayed mainly because of the bidders, but it has also been delayed due to some pending issues, including the issue of shares. Includes terms such as percentage, employee terms, and tax incentives.

The official said that the percentage of shares offered by the government is 60 while the bidders want a higher percentage.

He further informed that the bidders are seeking tax exemption on Federal Excise Duty (FED) on tickets. “The government wants to keep the PIA employees on the same terms for the next three years, while most of the bidders do not agree with it. Some want this period to be reduced to six months, while others want to keep them on contract.’

It may be recalled that the Privatization Commission had initially shortlisted six bidders, including Fly Jinnah, YB Holdings Private Limited, Air Blue Limited, Pak Ethanol Private Limited, Arif Habib Corporation Limited, and Blue World City.

Blue World City Chairman Saad Nazir has said in a statement that since the last date for submission of documents by the companies participating in the bid was September 25, only his company submitted these documents. “We kept asking the Privatization Commission for permission to deposit the bid amount on September 26, which we were denied.”

“We were told that some changes were expected, which surprised us,” Saad Nazir said. After the scheduled date passed, the extension of the date was suddenly announced. Companies that did not submit the data should have been disqualified.

Tahir Imran Mian, who keeps a close eye on aviation and covers privatization, attributed the delay to the lack of a serious candidate and the government’s desperate attempts to salvage the privatization process.

Speaking to Independent Urdu, he said that the government had mishandled the bidding process, as a result of which the matter was not progressed properly. Uncertainty has arisen due to mistakes made in the bidding process.
Tahir Imran Mian said that it benefits the stakeholders, who want this privatization at a minimum cost, while the government currently does not want to privatize PIA at a low cost. “Earlier, the government tried to involve Sharjah’s Air Arabia through Fly Jinnah first, but it was completely silent at first and later gave a clear answer.”

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He said that Blue World City has threatened to go to court as they object to the process and the recent delay. According to Tahir Imran, ‘On the other hand, Arif Habib wants to delay this process so that the prices of the shares, which are currently Rs 150, will fall further. The more uncertainty increases, the more desperate the bidders will become, which in turn will increase the desperation of the government and it will be ready to sell the PIA at very high prices.’

He added that if the share price falls to Rs 75 after a month, few bidders will get the shares at their desired price and some of them are not interested in reviving the airline, they just want to sell it cheaply. Want to make money from it by buying prices, no matter what. ‘Because so far I have not seen any plans for restoration.’

“Whereas if the Blue World Group takes the matter to court, it will prolong the entire privatization process.”

Tahir Imran described the delay in the PIA privatization process as ‘mainly a battle of nerves between the government and domestic bidders’. Bidders want to wear down the government so that the government decides in desperation, and the pressure on the government will increase over time.

According to Tahir, the government started a task in haste, as a result of which it is now stuck. The government thought that a large number of investors would come, which was a madman’s dream, and get the bid they wanted, but the opposite happened.

While raising the question, Tahir Imran said the solution to this issue was that the privatization of a white elephant like PIA cannot be done so easily. Because the main groups running this state are embedded within it. You can see for yourself, will you privatize Arif Habib and give the airline? Like steel was found? Then you know what happened to the steel mill? And knowing all this, who would be crazy to want to buy this airline?’