Pakistan draws three bids in second televised privatisation for national carrier PIA
· CNA · JoinRead a summary of this article on FAST.
Get bite-sized news via a new
cards interface. Give it a try.
Click here to return to FAST Tap here to return to FAST
FAST
KARACHI, Dec 23 : Pakistan received three bids in a televised auction for state carrier Pakistan International Airlines on Tuesday as the government attempts to push through a long-delayed reform demanded by the International Monetary Fund.
The auction is Pakistan's second televised attempt at selling the once storied flag carrier after a bungled process last year drew only a solitary bid that fell far below the government's reference price, derailing what would have been Pakistan's first major privatisation in nearly two decades.
Representatives of the bidding groups walked in one by one on Tuesday to deposit sealed offers into a transparent box during the live broadcast, briefly fumbling as they pushed envelopes through the slot in a public ceremony broadcast on state television.
Bids for a majority stake in PIA are scheduled in two phases. A second open-bidding ceremony is set for later in the day, officials said.
Subscribe to our Chief Editor’s Week in Review
Our chief editor shares analysis and picks of the week's biggest news every Saturday.
This service is not intended for persons residing in the E.U. By clicking subscribe, I agree to receive news updates and promotional material from Mediacorp and Mediacorp’s partners.
Loading
"I am thankful to the ministers and head of the Privatisation Commission for making the process transparent," Prime Minister Shehbaz Sharif said, calling on cabinet members to attend the second ceremony.
The bidders included a consortium led by Lucky Cement Limited, comprising power producer Hub Power Holdings Limited, Kohat Cement Company Limited and investment firm Metro Ventures.
A second consortium was led by Arif Habib Corporation Limited, comprising fertiliser maker Fatima Fertiliser Company Limited, private school network City Schools and real estate firm Lake City Holdings Limited.
The third bidder was private airline Air Blue (Private) Ltd.
Under the transaction structure, the government is open to selling up to 100 per cent of PIA, with any stake above 75 per cent subject to a 15 per cent premium, local media reported.
TRY, TRY AGAIN
Last year, the government set a minimum price of $305 million for a 60 per cent stake, but received a single bid of $36 million from real estate developer Blue World City, which declined to raise its offer, citing concerns over PIA's finances and "significant leakages".
Officials from several pre-qualified groups told Reuters at the time they chose not to bid due to concerns over policy continuity, unattractive terms and doubts about the government's ability to honour long-term commitments, particularly after Islamabad moved to renegotiate sovereign-guaranteed power contracts.
PIA's prospects have since improved. Islamabad has assumed most of the airline's legacy debt, the carrier has posted its first pre-tax profit in two decades, and Britain and the European Union have lifted a five-year ban that had cut PIA off from its most lucrative routes.
The reopening of those routes could materially lift revenues and support a higher valuation than in last year's failed auction, analysts and government officials have said.
The airline's sale forms part of a broader privatisation push under Pakistan's IMF bailout, which also includes plans to offload stakes in state-owned banks, power distribution companies and other loss-making enterprises as the government seeks to curb fiscal drain and restore investor confidence.
Newsletter
Week in Review
Subscribe to our Chief Editor’s Week in Review
Our chief editor shares analysis and picks of the week's biggest news every Saturday.
Sign up for our newsletters
Get our pick of top stories and thought-provoking articles in your inbox
Get the CNA app
Stay updated with notifications for breaking news and our best stories
Get WhatsApp alerts
Join our channel for the top reads for the day on your preferred chat app