Govt. Seeks Strong Investors, Excludes Provincial Governments from Bidding
The federal government on Thursday revised the conditions for prospective buyers of Pakistan International Airlines (PIA), aiming to attract only financially robust investors for the second round of the airline’s privatisation. Provincial governments have been explicitly barred from participating in the bidding process.
Muhammad Ali, Adviser to the Prime Minister on Privatisation, told reporters that interested parties have until June 3 to express their intent to acquire a majority stake in PIA.
He noted that the updated terms reflect lessons learned from the previous failed attempt at privatisation. To facilitate investors, the government will now allow changes to the lead consortium member up to two weeks before the bidding date.
The revised Expression of Interest (EOI) outlines the sale of 51% to 100% of PIA shares, including management control. Authorities are targeting a deal closure in the last quarter of 2025.
The June 3 deadline applies to all private bidders, while federal and provincial governments, as well as their state-owned entities, are barred from participation. However, affiliated organizations not classified as state-owned enterprises, such as the Fauji Foundation, remain eligible to participate in bidding.
Privatisation Commission Secretary Usman Bajwa confirmed Fauji Foundation’s eligibility, noting that it is among the entities reportedly considering a bid.
Privatisation Adviser Muhammad Ali announced that the Govt. has tightened the financial and procedural conditions for prospective bidders in the upcoming privatisation of Pakistan International Airlines (PIA). Under the revised guidelines, consortiums will be allowed to change their lead member up to 15 days before the bidding date, provided they meet the pre-qualification criteria and adhere to the Request for Statement of Qualification instructions.
Privatisation Commission Secretary Usman Bajwa added that the lead consortium member must have a minimum net worth of Rs 8 billion, and all changes will be subject to approval and vetting well in advance to avoid any impact on the final bid price.
The move follows last year’s failed privatisation attempt, where the sole bidder, a real estate developer, offered only Rs 10 billion against a minimum price of Rs 85.03 billion, sparking concerns about weak qualification standards.
To attract credible investors, the Govt. has now introduced a more robust financial framework. Companies not operating in the airline industry must demonstrate a minimum annual revenue of Rs 200 billion ($715 million) in audited financial statements from December 2023 or later, or at least Rs 100 billion ($360 million) annually over the last three years. Additionally, eligible bidders must demonstrate a cash reserve of Rs 28 billion ($100 million) or equivalent liquid assets. All financial statements must be audited by a globally recognized firm or a firm listed in Category A or B on the State Bank of Pakistan’s approved auditors’ list.
Ali also noted that an 18% GST on aircraft purchases or leases for PIA has been waived, and adjustments for the airline’s negative equity will be considered based on investor feedback. He added that the reference price is expected to exceed last year’s Rs 85.03 billion due to improvements in PIA’s balance sheet, the reopening of European routes, and the resolution of tax-related matters.
According to Bajwa, PIA’s balance sheet has mainly stabilized due to a Rs30 billion deferred tax credit, which contributed to the airline’s recent profitability. However, he emphasized that the airline still needs capital to expand beyond its current fleet of 15 operational aircraft.
Ali confirmed that no foreign Govt. has expressed interest in acquiring PIA, and the sale will proceed through an international competitive bidding process. The financial requirements have been deliberately made stringent to ensure that only financially sound and credible entities, including scheduled airlines, qualify to bid.
