A Turkish consortium has submitted the sole bid for taking over operations of Islamabad International Airport, offering a concession fee below the government’s stipulated minimum threshold, according to Sadiq ur Rehman, chairman of the bid evaluation committee.
The consortium, consisting of Terminal Yapi, ERG Insaat, and ERG UK, proposed a concession fee of 47% of revenue from airport operations. This falls short of the 56% minimum requirement set by the government.
Background and Next Steps
Pakistan, grappling with economic challenges, is pursuing privatisation initiatives to generate revenue. This includes outsourcing operations of major airports in Islamabad, Lahore, and Karachi as part of a broader push to reform state-owned enterprises under a $7 billion IMF programme.
The matter will now be reviewed by the International Finance Corporation (IFC), part of the World Bank Group and an advisor to Pakistan on the outsourcing project. The IFC will assess the bid and submit a final report before the government decides whether to proceed.
“The details of the financial proposal will… be presented and forwarded to the IFC for further evaluation and submission of final reports,” stated Sadiq ur Rehman.
Other Privatisation Efforts
Pakistan is also attempting to offload a 60% stake in Pakistan International Airlines (PIA) to raise funds. However, a prior attempt in October 2024 to privatise the national carrier yielded a single bid below the desired valuation.
Challenges and Implications
The below-threshold bid by the Turkish consortium underscores the challenges Pakistan faces in attracting competitive offers for its privatisation initiatives. A decision to accept or reject the bid will signal the government’s stance on flexibility in its revenue expectations, especially in a tight economic climate.
While privatisation could inject much-needed funds and improve operational efficiency, underwhelming bids might force the government to reconsider its strategies to attract foreign investment and balance fiscal objectives.
