The Pakistani government is considering a government-to-government (G2G) sale of Pakistan International Airlines (PIA) after a failed bid to privatize the struggling national carrier. The decision follows the rejection of an Rs 10 billion bid by Blue World City for a 60% stake in the airline, which was deemed too low compared to the minimum price of Rs 85.03 billion set by the government.
Privatization Setback
The Cabinet Committee on Privatization (CCoP), chaired by Deputy Prime Minister and Foreign Minister Ishaq Dar, opted to reject the bid based on recommendations from the Privatization Commission Board. With the privatization attempt falling short, the matter will now be referred to the federal cabinet for a final decision.
Exploring G2G Arrangements
Officials have indicated that the government is now exploring direct G2G sales as an alternative to traditional privatization, with potential interest from countries like:
- Qatar
- Gulf Nations
- China
These countries have historically provided financial support to Pakistan and may be pivotal in a potential acquisition of PIA.
PIA’s Financial Woes
PIA has struggled to turn a profit for nearly two decades, weighed down by liabilities totaling Rs 200 billion. To make the airline more attractive to potential buyers, the government is considering a plan to make it debt-free. Previously, the government had shifted about 75% of PIA’s $3 billion debt to its own accounts during earlier privatization attempts.
Future Prospects and Asset Sales
The CCoP has formed a committee co-chaired by the Minister of State for Finance to evaluate additional privatization options, including:
- Roosevelt Hotel in New York: Owned by PIA, this asset is being reviewed for potential sale.
- Services International Hotel: The CCoP has directed authorities to finalize its sale before the next meeting.
Strategic Shift
This move marks a significant shift in strategy, as the government seeks to find alternative avenues after repeated setbacks in PIA’s privatization efforts. The G2G sale option could potentially provide a quicker resolution while leveraging bilateral ties with friendly nations, helping to alleviate the national carrier’s financial burden and streamline its operations.
Conclusion
The outcome of the federal cabinet’s decision on the G2G sale and further steps towards privatization will be crucial in determining PIA’s future. The government aims to bring the airline back to financial stability and possibly reintegrate it into the private sector through a strategic partnership.
