Fresh criteria for pre-qualification: Govt aims to sell 51-100pc stake in PIA

Business Recorder

25-04-2025

ISLAMABAD: The federal government is hoping to offload 51 to 100 percent shares in Pakistan International Airlines Company Limited (PIACL) in fresh conditions for pre-qualification of bidding process expected to be concluded by next fiscal year.
A fresh Expression of Interest (EoI) for the privatisation of PIA has been published with a submission deadline of June 3, 2025. This is the second EoI issued by the current government with assertion of new clauses.
A non-refundable fee of Rs1.4 million is required with each application. The privatisation package includes all major business units—passenger services, ground handling, cargo, flight training, flight kitchen, and engineering. Key assets of the airline are also part of the offer. In a media briefing on Thursday, Adviser to the Prime Minister on Privatisation Muhammad Ali along with Secretary Privatisation Commission Usman Akhtar Bajwa shared the details of off load of PIA shares, DISCOs and Roosevelt Hotel.
No provincial governments or state-owned entities (SOEs) are eligible to take part in PIA bidding process; however, responding to a question, Privatisation Commission Secretary Bajwa said that Fauji Foundation could take part in the bidding as it does not come under SOEs ambit. Responding to question regarding Rs29 billion profit earned by PIA, Muhammad Ali said the equity of PIA had been turned from negative to zero equity, however, PIACL is not a listed company; therefore profit of PIA would be shared after the audit of its accounts.
New reference price and size of shares to be off loaded will be determined by Cabinet Committee on Privatisation (CCoP) in light of transaction structure of the entity.
New criteria for pre-qualifications of PIA privatisation: Applicant could be scheduled airline. For non-airlines business, 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 Rs100 billion or USD 360 million for each year during the last three years.
Applicant shall have (either applicant or consortium, the consortium members (in aggregate) shall have), Rs28 billion or USD 100,000,000 in cash or liquid assets.
Applicant has a net worth of at least Rs30 billion or $110,000,000 and if the applicant is a consortium, that the consortium members have an aggregate net worth of at least Rs30 billion or $110,000,000 and the lead consortium member has a net worth of at least Rs8 billion or $ 29 million.
Accounts of applicants to 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).
The bank credit reference should 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. Allowed to be replacement of the lead consortium members at least 15 days prior to bidding, subject to compliance to the requirements of the pre-qualification criteria and RSOQ instructions.
The government has already announced a range of incentives which include exemption from the 18 percent general sales tax (GST) on the purchase or lease of new aircraft. Additionally, protection and coverage will be provided in certain tax and legal cases. The move also involves the transfer of specific liabilities listed on PIA's balance sheet, aimed at making the offer more attractive to potential buyers.
The 19-story Roosevelt Hotel, located in midtown Manhattan, has been closed since 2020 and is owned by the Roosevelt Hotel Corporation, a subsidiary of PIA.
Secretary Privatisation Commission said that the CCoP had directed the PC Board to come up with priority option out of three considered by the forum. The joint venture (JV) with multiple options would be taken at the level of board, he added. The proposed transaction structure for the long-pending divestment of the Roosevelt Hotel, shifting its focus from leasing options to either an outright sale or a JV.
The privatisation of DISCOs, it has been said that Power Division will complete its preparations for the privatisation of three power distribution companies (DISCOs) — Hesco, Pesco, and Fesco — and financial adviser would be hired by July 2025.
Copyright Business Recorder, 2025