The Privatisation Commission (PC) has said that it is “fully prepared” for the second attempt at the Pakistan International Airlines’ (PIA) sell-off, with “several returning bidders and parties participating in the process”.
The commission informed this in the 6th meeting of the National Assembly’s Standing Committee on Privatisation, chaired by Farooq Sattar on Monday.
“The committee was briefed on various aspects of PIA’s privatisation, and informed by the Privatisation Commission’s chairman that the second attempt for PIA’s privatisation is fully prepared, with several returning bidders and parties participating in the process,” a statement from the National Assembly Secretariat read.
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In October last year, the government’s plan for privatisation of the national carrier fell flat after the only bidder, Blue World City consortium refused to match the minimum expectation of the PC of Rs85.03 billion and stuck to an offer of Rs10 billion for a 60% stake in the PIA.
The government now plans to start a fresh process for PIA sell-off.
In the Monday’s meeting, it was informed that bidders had recommended waiving 18% GST (Goods and Services Tax) imposed by the government on the induction of new planes and fleet expansion.
Removing the tax would facilitate new aircraft acquisitions and support the growth of the aviation industry, it was explained to the committee.
“The liabilities of PIA amount to Rs45 billion, including; Rs26 billion in taxation dues to the Federal Board of Revenue, Rs10 billion owed to the Civil Aviation Authority (CAA) and the remaining amount consists of pension liabilities.
“The government presented these concerns to the International Monetary Fund (IMF), and the IMF agreed that if PIA is privatised the 18% GST could be removed to encourage private sector investment in new aircraft.”
A mechanism would be devised to address outstanding liabilities, ensuring that financial burdens did not become a hindrance for potential investors, the statement said.
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The committee was further informed that non-core assets were not part of the PIA bidding process.
“The government is formulating a separate policy for these assets, for which a consultant has already been hired. The consultant has proposed two to three options to the Cabinet Committee on Privatisation. The Cabinet Committee will adopt one of these options and issue a policy regarding non-core assets.”
In the 5th meeting of the Standing Committee on Privatisation the previous month, it was informed that the IMF had agreed for cleaning of Rs45 billion negative equity of the Pakistan International Airlines Company Limited (PIACL).
The Privatisation Commission (Amendment) Bill
During the meeting, the committee also discussed the Privatisation Commission (Amendment) Bill 2024 (Government Bill) in detail.
As per the details, the committee raised an objection to Clause 4, Section 7(4), stating that the Ministry of Law should clarify whether there was any precedent where the prime minister had been given the authority to make privatisation decisions instead of the cabinet.
“The committee directed the Ministry of Law to present relevant details in the next meeting. Thereafter, the committee deferred the Privatisation Commission (Amendment) Bill 2024 (Government Bill) till its next meeting,” the statement said.
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