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Business Recorder
09-05-2025
- Business
- Business Recorder
Aurangzeb in UK to woo investors
EDITORIAL: Finance Minister Muhammad Aurangzeb and Muhammad Ali appointed as Advisor to the Prime Minister on Privatisation/Chairman Privatisation Commission with the status of Minister of State on 27 February 2025 are currently on a two-day visit to London to participate in Pakistan Investors Day on 8 May (yesterday). It is relevant to note that the Pakistan army was on high alert since the Pahalgam incident on 22 April this year based on the certitude that Modi's India would attack to deflect criticism for not having the intelligence to forestall the attack. Given that both Aurangzeb and Ali are widely regarded as providing a critical plinth in the existing cordial civilian-military ties, Ali's statement prior to departure, with the Indian attacks on nine sites just hours away - two in Punjab and the rest in Azad Jammu and Kashmir – is baffling: 'this visit reflects Pakistan's forward looking vision. We are here to build trust, forge partnerships, and demonstrate that Pakistan is open for business – with a clear agenda for growth, stability and opportunity.' The Indo-UK free trade agreement reached a day before the attack, three years in the making, nonetheless took a distant second place to the Indian attack on Pakistan. The Pakistan Investors Day conference on the other hand, where the focus would be on luring foreign investors to Pakistan, the response is unlikely to be positive or at least not till war has ended. The presence of these two men was required in Pakistan today as an expression of solidarity with the nation in the aftermath of the Indian attack. In addition, the budget exercise is ongoing at present, with credible reports that the International Monetary Fund team is reviewing and dictating expenditure cuts, setting unrealistic revenue targets and upping the administered electricity and gas prices with the objective of achieving full cost recovery, and this is the time when one would have hoped for the Finance Minister's physical presence in the country that would have facilitated his interaction with all sectors. Ali would have been well advised to focus on the privatisation plan particularly of Pakistan International Airlines as he has publicly deferred its privatisation to the last quarter of the current calendar year though the team negotiating with the Fund had pledged it much sooner. Foreign direct investment has been a proactive strategy since June 2023; however, the actual annual foreign direct investment inflow has yet to exceed 1.6 billion dollars according to government data. And while Aurangzeb and Ali are not elected by the people and as such are not technically representatives of the people of this country yet they are appointed at the taxpayers' expense with the objective of serving the people and their absence from the country today does raise uncomfortable questions. Copyright Business Recorder, 2025
Business Recorder
25-04-2025
- Business
- Business Recorder
Fresh criteria for pre-qualification: Govt aims to sell 51-100pc stake in PIA
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
Express Tribune
24-04-2025
- Business
- Express Tribune
Govt tightens PIA bidding terms
Listen to article The government on Thursday tightened conditions for prospective buyers of Pakistan International Airlines (PIA) to attract only financially sound parties for the second privatisation bid and also barred provincial governments from participating in the bidding. The prospective bidders can show their interest in acquiring majority shares in PIA till June 3, said Muhammad Ali, Adviser to Prime Minister on Privatisation, while talking to journalists. He said that the government tightened the conditions by learning lessons from the last failed privatisation attempt. It also facilitated investors by allowing them to change the lead consortium member two weeks before the bidding date. The adviser shared details of the revised Expression of Interest (EOI) for selling 51% to 100% PIA shares along with management control. It hopes to strike a deal by the last quarter of this calendar year. The government has set the June 3 deadline for submitting documents by prospective buyers excluding the federal and provincial governments and their entities. However, the affiliates of federal and provincial governments that do not fall in the category of state-owned enterprises like the Fauji Foundation are eligible to participate in the bidding, said Privatisation Commission Secretary Usman Bajwa while responding to a question. Fauji Foundation's name is in circulation as one of the potential consortiums to bid for acquiring PIA. Muhammad Ali said that the government had allowed the replacement of lead consortium members at least 15 days prior to bidding, subject to compliance with the pre-qualification criteria and the Request for Statement of Qualification instructions. Usman Bajwa said that the minimum worth of the lead consortium member should be Rs8 billion and it would have to go through all the checks before being declared eligible to participate in the bid. The privatisation adviser said that the change in the lead consortium member would not affect the price as all those changes had to be approved and vetted much before the bidding date. The government attempted to privatise PIA last year but ended up with the sole bidder that too a real estate developer, which offered Rs10 billion against the minimum price of Rs85.03 billion. This raised questions about the qualification criteria. The government has exempted 18% GST on the purchase or lease of aircraft for PIA and the negative equity can also be adjusted in light of the feedback to be received from the parties, said Ali. The reference price would be better than the last price of Rs85.03 billion due to the improvement in balance sheet of the airline, opening of European routes and settlement of 18% GST, said the privatisation adviser. To a question, the Privatisation Commission secretary said that according to the approved accounts, the assets and liabilities' position of PIA was more or less the same. He said that the overall balance sheet of the airline had improved because of booking the deferred tax credit of Rs30 billion this year, which was also a reason for showing profits. "One of the factors of PIA profitability is the adjustment of past tax credits at the current value of Rs30 billion," said the privatisation secretary. PIA has started breathing but it still needs money to grow and expand the 15 operational aircraft fleet, said Usman Bajwa. The adviser clarified that no foreign government was interested in buying PIA at this stage and the government would conduct the international competitive bidding. Ali said that financial soundness conditions had been made stringent to make sure that only financially credible companies come forward. The prospective buyer could be a scheduled airline. In case of non-airline business bids for PIA, such enterprise must have a minimum annual revenue of Rs200 billion, or $715 million, as per the audited financials of December 2023 or later. The minimum annual revenue of Rs100 billion, or $360 million, for each year during the last three years is also required, said the adviser. Ali said that there was a new insertion in the financial criteria for qualification related to liquidity and cash in hand. The party must have Rs28 billion, or $100 million, in cash or liquid assets, said the adviser. According to another improved condition, the prospective buyer must be audited by an international renowned firm of chartered accountants or category 'A' or 'B' list of auditors as per SBP's panel of auditors.
Business Recorder
24-04-2025
- Business
- Business Recorder
PIA privatisation: govt restarts airline sale process with fresh EOI call
Pakistan government announced on Thursday that it was seeking fresh bids for the privatisation of the Pakistan International Airlines (PIA), marking a renewed effort to offload its stake in the national carrier. The Privatisation Commission (PC) invited expressions of interest (EOIs) through an advertisement from investors interested in acquiring a majority stake in the restructured airline. 'Interested parties that are companies, firms, body corporate or other legal entities should submit EOIs (as a single entity or as a consortium)………with non-refundable processing fee of $5,000 or Rs1,400,000. 'Where an interested party is submitting an EOI as a consortium, the processing fee is only required to be paid by one member of the consortium……The EOI must be available with the Privatisation Commission and the processing fee must be paid, on or before 16:00 Hours, on Tuesday, June 3, 2025,' the advertisement read. The government has been seeking to sell a 51-100% stake in the debt-ridden carrier, to raise funds and reform cash-draining, state-owned enterprises (SOEs) as envisaged under a $7 billion International Monetary Fund programme (IMF). It failed in the first attempt to privatise the PIA last year after receiving a single offer, well below the asking price of more than $300 million. Blue World City consortium refused to match the minimum expectation of the Privatisation Commission of Rs85.03 billion and stuck to its original offer of Rs10 billion for a 60% stake in the PIA, ending the bidding process of the national flag carrier's privatisation. The PC board approved seeking new bids, the ministry said in a statement last week. 'The board approved the pre-qualification criteria for selection of prospective bidders,' it said then. The national carrier returned to profit after 21 years, posting a net profit of Rs26.2 billion for the year 2024. It recorded an operational profit of Rs9.3 billion for 2024, according to a PIA press release issued earlier this month. The last time the PIA posted a profit was in 2003 and later remained in loss for the next two decades. Passenger arrested for 'smoking, misbehaving with crew' during PIA flight to Paris PIA is a full service airline, providing aviation services supported by its ancillary segments. The business segments include passengers, ground handling, flight training, cargo engineering and flight kitchen. In the last financial year, the advertisement says, PIA served approximately 4 million passengers across 30 destinations, carrying out 268 flights per week. The Government of Pakistan (GOP) through PIA Holding Company Limited (PIA Holdco) owns approximately 96% of the issued capital of the PIA. PIA and PIA Holdco filed a scheme of arrangement with the Securities and Exchange Commission of Pakistan (SECP) under the Companies Act, 2017, which was sanctioned by the SECP through its order dated May 3, 2024 (SOA sanction order). Pursuant to the SOA Sanction Order, non-core assets and non-core liabilities were transferred to PIA Holdco (non-core business) and the PIA continues to hold the core assets and core liabilities (core business). The core business includes assets, liabilities, employees pertaining to air transport operations and allied services (including ground handling, flight training, cargo engineering and flight kitchen), rights and obligations under various operational agreements executed by the PIA including the air services agreements, code sharing agreements, fuel supply agreements and passenger sales agency agreements. Pursuant to the SOA sanction order, the shareholders of PIA became the shareholders of PIA Holdco and PIA became a wholly-owned subsidiary of PIA Holdco, with a single class of ordinary shares. PIA Holdco was listed on the stock exchange and PIA ceased to be listed.
Express Tribune
18-04-2025
- Business
- Express Tribune
PIA privatisation: fresh bid process approved
The Privatisation Commission is likely to publish a fresh advertisement next week for the divestment of 51 to 100 per cent shares of Pakistan International Airlines Corporation Limited (PIACL). A meeting of the Privatisation Commission Board was held on Thursday, chaired by Commission chairman Muhammad Ali. During the meeting, the board approved the eligibility criteria for interested bidders. In its previous session, the board recommended to the Cabinet Committee on Privatization (CCOP) a transaction structure for the second attempt to privatize PIACL. The structure is based on the sale of 51% to 100% PIACL's share capital, along with management control. The final terms and conditions for the transfer and acquisition of equity stake shall be finalised during the bidding process and included in the bid documents for CCOP's approval. Earlier this month, the country's defence minister announced that the national flag carrier had posted an annual profit for the first time in over two decades, ahead of the government's renewed efforts to privatise the airline. The disclosure was made at a PIA board meeting, the minister said. "PIACL Board today has approved its accounts FY 2024, and after 21 years, it has achieved an operating profit of Rs9.3 billion ($33.14 million) & Net Profit of Rs26.2 billion (after deferred tax adjustment)," Defence and Aviation Minister Khawaja Muhammad Asif said in a post on X, which was confirmed by the airline in a statement. (With input from Reuters)
