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Business & Finance

PIA privatisation: Blue World City refuses to match PC’s ‘minimum expectation’ of Rs85.03bn, sticks to Rs10bn offer

  • Process of PIA bidding concludes with just one sole bid
  • Ball now in PC and cabinet's court
Published October 31, 2024 Updated November 1, 2024
LIVE: Govt unveils PIA privatisation bid

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 Pakistan International Airlines (PIA), ending the bidding process of the national flag carrier’s privatisation.

Rules and regulations indicate that the ball is now in court of the Privatisation Commission to declare Blue World City as the highest ranked bidder or cancel the bidding process.

“The bid offer will be submitted to the relevant forums ie PC Board, Cabinet Committee on Privatisation and finally, the Cabinet,” said an official of the Privatisation Commission in response to a query from Business Recorder. “The cabinet is the final authority to accept or reject the bid.”

The real estate development company, which was the only entity to bid for the national flag carrier, submitted the bid of Rs10 billion after which it was given 30 minutes to meet the PC criteria.

However, after the interval, a representative of Blue World City stated that the valuation the company made put it in the range of its bid.

Earlier, the bidding process for the privatisation of PIA got under way at the Serena Hotel with the Privatisation Commission confirming to Business Recorder that the consortium of real estate group Blue World City submitted the lone bid.

The bids were to be submitted at 1:30pm. Other groups stayed away from depositing the ‘earnest money’, and hence, were not eligible to submit a bid.

The lone bid was unveiled at around 6:35pm, and Blue World City made an offer of Rs10 billion for the stake in PIA.

A total of six groups had earlier been shortlisted to bid for shares in PIA including Airblue Ltd., Arif Habib Corporation Ltd., Air Arabia’s Fly Jinnah, Y.B. Holdings Pvt., Pak Ethanol Pvt. and real estate consortium Blue World City.

However, Bloomberg on Tuesday reported that the government received interest from only one group out of a total of six for a stake in the national carrier as other consortiums stayed away from one of the country’s major privatisation attempts.

It was confirmed on Wednesday that Blue World City was the sole bidder for a stake in the country’s flag carrier.

Saad Nazir, Chairman of Blue World City, confirmed to Reuters in a text message that his company is the only one to enter the final bidding process, though he declined to disclose the earnest money it had submitted.

Market sources indicated that the earnest money amount was Rs500 million, and was refundable.

Pakistan aims to privatise flag carrier PIA in November: finance minister

Blue World City had a consortium that included Blue World Aviation and IRIS Communication Limited. The group is also looking into acquiring operations of the Islamabad International Airport which the government is looking to outsource.

Islamabad previously said it was putting on the block a stake of between 51% and 100% in the debt-ridden airline as part of reforms urged by the International Monetary Fund (IMF) with which it has an ongoing 37-month, $7-billion bailout.

However, after much delay, during a time when potential bidders raised several concerns over various features of the privatisation, the process took place place amid strict scrutiny.

Comments

200 characters
Pakistani Oct 31, 2024 02:02pm
Will a privatization of this important national entity be fair with 1 bidder? Govt should review the entire process and encourage competition.
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Power Master Oct 31, 2024 02:06pm
Winner the highest briber Others intimidated not to submit bids
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Zaman Zuram Khan Oct 31, 2024 03:20pm
@Power Master, who else want to buy money-losing PIA
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KU Oct 31, 2024 03:50pm
The same infamous for real estate scams? It's been more than 10 years that people are waiting for justice.
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Waseem Akhtar Oct 31, 2024 05:53pm
@Pakistani, PIA is the most irrelevant and unimportant national career, which we should get rid of at all cost. Just remember the Pakistan steel, and the loss caused since failed privitization.
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Imran Sarr Oct 31, 2024 06:12pm
@Pakistani, only fools in Pakistan will believe in the government to do any good. Whole airline including all assets and debts need to be off loaded. The hybrid model will not work.
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KhanRA Oct 31, 2024 06:24pm
PIA, like Pakistan itself, was once a pride of the developing world. And now like the country itself, is heading towards dissolution.
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Imran Sarr Oct 31, 2024 06:27pm
This airline must be sold in full along with debts. Like one of the British newspaper sold for £1.
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Az_Iz Oct 31, 2024 06:58pm
Just get rid of it.
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Az_Iz Oct 31, 2024 07:00pm
@KhanRA, even Nehru used to think, Pakistan would beg India to take it back,in just a few years.
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Az_Iz Oct 31, 2024 07:04pm
Get rid of it, even if the bid is Rs 1. If that does not work, make it even more attractive.PSM free, with purchase of PIA.
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T Oct 31, 2024 07:13pm
government making stringent demands for a depreciating asset.
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Test Oct 31, 2024 07:23pm
@Imran Sarr, agree with you sell it for even 1 billion dollars
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IMTIAZ CASSUM AGBOATWALA Oct 31, 2024 08:12pm
Looks like another disaster in the making .
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zh Oct 31, 2024 09:06pm
This current government and establishment have set a precedent of disregarding court orders. Potential investors realize that the investment security relies solely on the goodwill of the powerful.
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zh Oct 31, 2024 09:10pm
When leaders like the Sharifs, Zardaris, and Kiyanis invest their wealth abroad, why would anyone feel confident investing in Pakistan?
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Pakistani Oct 31, 2024 09:20pm
With the huge gap between the offer and minimum for this important entity, time to scrap now, review the parameter, improve PIA workings and restart from scratch.
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Make in Pakistan Oct 31, 2024 10:47pm
What else do you expect for a technically bankrupt company? Sell it whatever the price is - it's not a strategic asset.
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Fuad Oct 31, 2024 11:06pm
Sure shot scandal averted. Blue World money is not Kosher, & FBR should swing into action to find out source of the Rs.10 bln. PIA should be sold for Rs.1.0 to a bidder with managerial experience.
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A. Chak Nov 01, 2024 02:00am
Privatisation Minister Fawad Hasan Fawad told Reuters in Feb 2024. “Our job is 98% done. The remaining 2% is just to bring it on an excel sheet after the cabinet approves it.” Lies . Lies .Lies.
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A. Chak Nov 01, 2024 02:03am
Declare bankruptcy. Talk to the debtors and reduce the principal. And then hand it over to people who know what they are doing. The government should have NO stake in PIA.
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Irfan Nov 01, 2024 02:11am
Govt should handover PIA administration to Blue world highest bider. Very good opportunity for Pakistan.
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Noor M Sheikh Nov 01, 2024 07:47am
it is better to hand over to Shahid Khaqan Abbasi with a deal to blue Air
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Tariq Qurashi Nov 01, 2024 09:39am
For a 10% or 20% stake, management of PIA should be handed over to Emirates or Qatar Airlines, and they should be given a free hand to manage the airline without government interference.
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Ali Nov 01, 2024 09:43am
Old Pakistan for sale.... Whole nation for sale
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Abdullah Nov 01, 2024 10:05am
Any one will bid 100 billion or more provided there is right to fire the useless pia staff after acquiring.With govt not allowingbit i dont think its worth a billion too.
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Ashley Establishment Nov 01, 2024 06:48pm
Well played Blue world. Show them who's the boss.
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T Qurashi Nov 02, 2024 12:07pm
It may be more profitable for the government to just sell PIA’s assets, rather than sell the company for a pittance.
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