Govt tries again to sell PIA

The Privatisation Commission (PC) has announced that it is fully prepared for a second attempt at privatising Pakistan International Airlines (PIA), with several returning bidders and parties involved in the process.

The National Assembly’s Standing Committee on Privatisation, chaired by Dr. Farooq Sattar, reviewed the progress of Pakistan International Airlines (PIA) privatisation in its sixth meeting. The government aims to restart the process after last year’s failed attempt when the only bidder, Blue World City consortium, offered just Rs10 billion for a 60% stake far below the Rs85.03 billion minimum expectation.

To attract investors, the government is considering waiving the 18% Goods and Services Tax (GST) on new aircraft. Bidders argue that removing this tax would encourage private sector investment and boost the aviation industry. The International Monetary Fund (IMF) has agreed to remove the tax if PIA is privatised.

The committee also discussed PIA’s financial liabilities, which amount to Rs45 billion. These include Rs26 billion in taxes owed to the Federal Board of Revenue, Rs10 billion to the Civil Aviation Authority (CAA), and outstanding pension liabilities. The government is working on a strategy to clear these dues and make the airline more appealing to investors.

Additionally, the committee confirmed that PIA’s non-core assets would not be included in the privatisation bid. A separate policy is being formulated, and a consultant has been hired to present recommendations to the Cabinet Committee on Privatisation.

The IMF has already agreed to clear PIA’s Rs45 billion negative equity, marking a crucial step in restructuring the airline.

The committee also reviewed the Privatisation Commission (Amendment) Bill 2024 and raised concerns about a clause granting the prime minister sole authority over privatisation decisions. The bill has been deferred until further legal clarification is provided.