By SKM
April 24, 2025
ISLAMABAD: The government has revised the Expression of Interest (Eo1) from the previous one, seeking maximum participation of serious contenders in the bidding process for the sale of Pakistan flag carrier — Pakistan International Airlines (PIA) hoping the transaction with an exemption of 18 percent GST will be done in the last quarter of current calendar year.
Mr Muhammad Ali, Adviser to PM on Privatization stated this here on Thursday while interacting with media men at his office. Flanked by the Privatization Secretary, Mr Adviser also said: “We have managed the nod of IMF for exemption of 18 percent GST on sale of PIA’s shares of 51-100 percent.”
He said that bidders can show their interests by June 3, 2025.
“PIA has 6900 regular employees and the government will ask the buyer of the maximum shares of the Airline to retain them at least for three years, but this issue will be settled with the consent of the new management. The state-owned entities will not be entitled to participate in the bidding process.”
However, when asked if Fauji Foundation can participate in the PIA’s bidding process, Mr Ali said that Fauji Foundation is not an SOE (Sate-Owned Entity). So it can but with a partner having Airline business experience.
“So far PIA has earned Rs29 billion profit which will help improve the negative equity. With the restoration of the profit-making routes such as a direct flight to Paris and in the days to come, the flight route to the UK would also be restored. This will help increase the profit of the PIA. We have a fleet of 34 planes out of which 19-20 are operational. Mr Ali said that the government has also planned to hold roadshows for generating more interests across the world for PIA privatization and to this effect in the Middle East, the government would hold roadshows.”
“We have excluded the liabilities amounting to Rs600 billion from the financial sheet of PIA making it attractive for investors.” The Privatization secretary said that the PIA has started breathing, but still it needs capital to grow. He said that the government is willing to absorb the additional liabilities that may increase till the privatization.
Mr Ali said that this time the government has introduced five changes in EoI to facilitate the investors and ensure transparency. On the issue of technical and management capability criteria, for non-airlines business applicant, applicant will have management and operation of a non-airline enterprise(s) for last 10 years with minimum annual revenues of PKR 200 billion or USD 715 million as evidenced by audited financials of December 2023 or later; and minimum annual revenue of PKR 100 billion or USD 360 million for each year during the last 3 years.
He said that on the issue of financial criteria, this time applicant shall have (either Applicant or Consortium, the Consortium Members (in aggregate) shall have), Rs28 billion USD 100 million in cash or liquid assets.
Applicant must have a Net Worth of at least Rs30 billion or USD 110 million and if the Applicant is a Consortium, that the Consortium Members have an aggregate Net Worth of at least Rs 30 billion or USD 110 million and the Lead Consortium Member has a Net Worth of at least Rs8 billion or USD 29 million.
Mr Adviser also said that accounts of applicant should be audited by international renowned firm of chartered accountants or Category ‘A’ or ‘B’ list of auditors as per SBP’s panel of auditors maintained under Section 35(1) of Banking Companies Ordinance, 1962 (as amended from time to time).
On the issue of Bank Credit References, Mr Ali said that the bank credit reference will include details of the credit lines acquired from the bank, a confirmation that the Applicant (and in the case of a Consortium, each Consortium Member) has consistently paid outstanding bank liabilities in a timely manner, and a verification of the latest Credit Information Bureau (ECIB) status, affirming that the Applicant (and in the case of a Consortium, each Consortium Member) has no history of default or relevant information in case of any default, during the last 10 years.
This time, we have also allowed the lead consortium members to replace at least 15 days prior to bidding, subject to compliance to the requirements of the pre-qualification criteria and RSOQ instructions.
To a question, he said that Ernst and Young (E&Y), which is helping the Privatization Commission as an adviser, has an ample experience in selling the state-owned entities across the world, he mentioned that E&Y has managed to sale India Airlines, Italian Airlines and Scandinavian Airlines. About the Roosevelt hotel in New York, Adviser said that many complexities are involved in it and Financial Adviser is in process of making various options including Joint Venture with multiple exist options.
About the privatization of three Discos (IESCO, GEPCO and FESCO), the transaction structure would be approved by the Cabinet Committee on Privatization by May end or in first week of June. Ends
