Rs45bn liabilities issue resolved with IMF consent: PIA sell-off to be completed by year-end, Senate body told

ISLAMABAD: Pakistan International Airlines’ privatisation process will be completed by the end of this year as the issue related to the Rs 45 billion liabilities has been resolved with the IMF’s consent.

This was stated by Secretary of the Privatisation Commission, Usman Akhtar Bajwa, during a briefing to the Senate Standing Committee on Privatisation, which met here on Thursday with Senator Dr Afnanullah Khan in the chair.

He said that in the last bidding, the major obstacle, which kept the buyers away, was the liabilities of Rs 45 billion. The liabilities include tax liabilities of around Rs 26 or 27 billion, which PIA collected from the passengers, but had not paid to the Federal Bureau of Revenue (FBR).

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He said that since the IMF allowed the Government to bear these liabilities and also gave consent for some tax relaxation, like waiver of General Sales Tax (GST) on the purchase of new planes by the new buyer to upgrade the fleet.

He said that four interested parties, which have shortlisted, are consortium comprising Lucky Cement Ltd, Hub Power Holdings Ltd, Kohat Cement Company Ltd, and Metro Ventures (Pvt) Ltd; a consortium comprising Arif Habib Corporation Ltd, Fatima Fertilizer Company Ltd, City Schools (Pvt) Ltd and Lake City Holdings (Pvt) Ltd; Fauji Fertilizer Company Ltd and Air Blue Ltd.

The Secretary of the Privatisation Commission briefed the committee that the privatization process of PIA is currently in its phase of second attempt for privatization. He informed that all stakeholders are currently analysing the liabilities and assets of the PIA Corporation Limited (PIACL). After mutual consensus on the terms and conditions, the PIACL is expected to be privatised by the end of this year.

The Senate’s panel expressed concern over the lack of participation by leading international airlines in the privatization process of PIACL.

The Secretary of the Privatization Commission informed that although the opportunity was marketed across the region, regional airline companies were reluctant to invest in acquiring the competitor. “Inefficient and sick PIA suits foreign airlines because through this they get business from Pakistan,” he commented. He said that PIA just started its flight operations to Manchester and its flights for the next four months are fully booked.

While briefing the committee on the Roosevelt Hotel, New York, the Secretary of the Privatization Commission informed that the financial advisory firm JLL (Financial/Real Estate Advisor) had conducted due diligence and analysed the transactional structure of the property, which comprises over 650,000 square feet, including a 17-storey building. The advisory firm proposed a joint venture structure with multiple exit options for the Government of Pakistan.

The proposal was approved by the Federal Cabinet on July 8; however, the advisory firm later withdrew its services due to a conflict of interest. The government is now in the process of hiring another financial advisory company to continue the privatization process.

The Chief Executive Officer, PIA Holding Company Limited (PIAHCL),briefed the committee on the matter related to the transfer of the Precision Engineering Complex (PEC) of Pakistan International Airlines Holding Company Limited (PIAHCL) to the Pakistan Air Force.

The committee was informed that the Precision Engineering Complex is defence-related, comprising 223 employees and carrying liabilities pertaining to 381 retired employees. The Complex spans over 200 acres of land. Since the 1980s, the PEC has been engaged in the manufacturing of aircraft parts for Boeing and has also contributed to the production of defence equipment.

To a query, the Secretary of the Privatisation Commission said that the revenue generation of the Complex during the current year stood at Rs. 397 million, whereas its expenditures exceeded Rs. 850 million. In line with the Cabinet decision dated May 1, the ownership of the Precision Engineering Complex will be transferred from PIACL to the Pakistan Air Force, along with all existing liabilities and assets.

The committee also inquired about the status of the outsourcing of landside services at Islamabad International Airport. It was briefed that a Turkish company initially participated in the bidding process but later withdrew due to unresolved issues over the percentage share ratio between the company and the government. It was further informed that a Government-to-Government (G2G) agreement with the United Arab Emirates (UAE) is currently under discussion for the management of landside services at Islamabad Airport.

The chairman of the committee recommended that the landside services of Islamabad International Airport be outsourced to a reputable international company capable of managing operations efficiently and providing world-class facilities in accordance with international standards.

Afnanullah appreciated the successful privatization of the First Women Bank Limited (FWBL), which was acquired by the International Holding Company (IHC), a UAE-based firm, along with all its liabilities and employees.

The chairman further directed the concerned authorities to resolve the pending issues and complaints of retired PIACL employees regarding their pensions at the earliest.

Copyright Business Recorder, 2025