Govt set to hand over PIA to new owners by month-end

ISLAMABAD: The government is set to hand over Pakistan International Airlines (PIA) to its new owners by the end of the current month, as all remaining codal formalities and documentation have been completed.

This was revealed by Prime Minister’s Adviser on Privatisation, Muhammad Ali, in an interview with Business Recorder.

PIA was sold in December 2025 to a consortium led by Karachi-based Arif Habib Corporation, which acquired a 75 percent majority stake for Rs135 billion (approximately USD482 million) through a televised auction.

Subsequently, Fauji Fertiliser Company (FFC) joined the investor group.

READ MORE: President Zardari approves PIA’s privatisation bill

The transaction includes Rs10 billion for government equity and Rs125 billion in committed capital for debt reduction and fleet modernisation.

Responding to a question, Muhammad Ali said there is no hurdle in handing over the airline to the buyers, although certain issues had to be resolved between the bidding and closing stages of the transaction.

He explained that PIA had several global contracts, loans secured against its planes, and lease agreements that required No Objection Certificates (NOCs). Permissions from lenders were also necessary to transfer these agreements from PIA to the new entity.

“There was an understanding that a number of liabilities would be transferred to the PIA Holding Company, which involved substantial effort. Additionally, issues related to the Federal Board of Revenue (FBR) required resolution, which took time,” he said.

He added that the PIA Act of 1956 was repealed—except for a clause retaining the airline’s name. Initially promulgated through an ordinance due to Parliament not being in session, the law was subsequently approved by Parliament and is now in effect.

“Now, the target is to hand over PIA to the buyers by the end of the current month,” he said.

Replying to another question, he said that during the transition period, management decisions are being taken by PIA in consultation with the bidders.

On tax concessions, the adviser said that at the time of structuring the transaction, it was agreed for all bidders that General Sales Tax (GST) would not be applicable on aircraft, spare parts, and related items, as its imposition could render operations unviable and undermine competitiveness.

“As part of the transaction, it was agreed that there will be no GST on aircraft and spare parts for PIA. This required IMF approval, which has been obtained,” he added.

He noted that similar concessions could be extended to other airlines, but this would require fresh approval from the IMF. The Privatisation Commission supports extending such facilities to ensure a level playing field.

On another matter, Muhammad Ali said the Privatisation Commission (PC) Board has reviewed the proposed Transaction Advisory Services Agreement (TASA) with the Asian Development Bank (ADB) for outsourcing operations at Islamabad International Airport (IIAP).

Following detailed deliberations, the Board appreciated progress on the transaction and sought further clarity on certain provisions before taking up the agreement in a subsequent meeting. The plan envisages engaging a qualified private-sector operator under a long-term concession through a transparent and competitive process, aimed at improving efficiency, passenger experience, and aligning services with international standards.

He added that substantial preparatory work has also been completed for the airports in Karachi and Lahore, each involving potential investments of around USD500 million.

Regarding the privatisation of petroleum sector entities—including OGDCL, SNGPL, and SSGCL—he said proposals are currently under consideration by the Cabinet Committee on State-Owned Enterprises (CCoSOEs). The Privatisation Commission will initiate the process once a decision is taken.

He emphasised that unless the private sector is allowed to participate in gas purchase and sale, improvements in the sector will remain limited. He suggested allowing private players to import gas, utilise the transmission infrastructure of Sui companies, and pay wheeling charges.

“I hope we will complete transactions of five DISCOs—including IESCO, FESCO, and GEPCO—along with long-term concession agreements for HESCO and SEPCO, as well as privatisation of HBFCL, ZTBL, and Islamabad airport during the next fiscal year, as significant groundwork has already been completed,” he said.

Copyright Business Recorder, 2026