Islamabad: The auction for the privatization of loss-making national airline Pakistan International Airlines Corporation Limited (PIACL) has entered the final stage, with Arif Habib Consortium placing the highest bid of Rs115 billion, Lucky Cement placing Rs101.5 billion while Air Blue placing Rs26.5 billion.
The sealed bids submitted on Tuesday morning were received from pre-qualified bidders Lucky Cement, private airline Air Blue and investment company Arif Habib.
Representatives of the bidding groups came one by one to the public event in Islamabad and submitted their sealed offers in a transparent box, during which there was a brief confusion in putting the envelopes. The event was broadcast live on state TV.
After the bids are received, the Privatization Commission Board and the Cabinet Committee on Privatization will now approve the reference price for the PIACL bid.
Advisor to the Prime Minister on Privatization Muhammad Ali will also hold a press conference after the conclusion of the auction process. The entire process will be telecast live and streamed on all TV channels as well as the government’s relevant social media handles, where the government will hope that the situation that occurred during the last airline auction does not repeat itself.
Speaking to the media on Tuesday, Muhammad Ali said that by the grace of God, we will get good bids, good investments will come and we will be successful.
The auction is Pakistan’s second attempt to sell the once-famous national airline, after a televised auction last year failed when the only bid was far below the government’s reference price, stalling the first major privatization in nearly two decades.
Meanwhile, Prime Minister Shehbaz Sharif, while addressing the federal cabinet meeting, thanked government officials and the Privatization Commission for their role in the privatization of the national airline.
He stressed that the process had been made transparent and said it would be the biggest transaction in Pakistan’s history.
He said that as the auction begins today, the offers will come in sealed envelopes, there will be transparent boxes and there will be live broadcasts. When the price is fixed, the envelopes will be opened, there will be a competition and the highest bidder will be the winner.
He added that only God knows how far the bidding will go, but the process will have to come back to the cabinet.
Unsuccessful bidders to be out of PIA management
Earlier, Muhammad Ali had said that under a unique condition, the two unsuccessful bidders would be excluded from any role in the airline’s management in the future.
In recent statements, he clarified that the losing bidders would have no right to join the successful bidder, and only those groups that were not part of the auction would be able to join the new management.
This means that only one of the three consortiums currently in the race will become part of the management of the national airline after acquiring a majority stake, while the Fauji Fertilizer Company will retain the option to join them later.
Before Tuesday’s bid, there were reports that a deal was being considered behind the scenes between at least two parties, namely Arif Habib and Lucky Cement Groups, which later fell through.
In a tweet, senior journalist Kamran Khan pointed to a meeting in which a controlling share was proposed to be divided among three of the four interested parties. However, according to him, the arrangement fell through when one party, the Lucky Cement Group led by Muhammad Ali Tabba, did not agree to it.
Tabba Group and a senior government official who was aware of the developments confirmed this but clarified that it was not a government-sponsored meeting but an informal one.
According to officials, there is a plan to sell 75 percent of PIA shares, the successful bidder will be given 90 days to buy the remaining 25 percent shares. The government took over PIA’s liabilities of Rs 654 billion last year.
Routes to England and the rest of Europe have been restored, this time the privatization of PIA is more attractive, according to the Privatization Commission, the military fertilizer company has withdrawn from the bidding process.
There are now three pre-qualified groups left in the race for PIA privatization, in addition to Air Blue, two consortiums led by Lucky Cement and Arif Habib Corporation are also in the fray.
According to the Privatization Commission, 92.5 percent of the 75 percent share will be used for investment in PIA, the remaining seven and a half percent will be transferred to the government.
According to Privatization Commission officials, the potential investor will have to invest Rs 80 billion over the next 5 years to put PIA on its feet.
It will be given aviation, cargo business, training wing, kitchen business, PIA employees will be given job security for one year, pension and post-retirement benefits will be the responsibility of the holding company.
The new owners will be responsible for the salaries and benefits of existing employees, immediate investment and professional management will be required for the financial stability of the institution.
The second phase of the process for the privatization of PIA has begun, in the second phase, bids will be opened and the reserve price will be matched.
The Prime Minister’s Advisor on Privatization Muhammad Ali said that the government has decided to privatize fifty-one to one hundred percent of PIA’s shares, some of the bidders who came demanded that they were interested in buying 75 percent of the shares, while some were interested in 100 percent.
He said that the government decided to sell 75 percent of the shares. The government’s aim is not just to sell PIA and take money, but to make PIA an excellent airline. For this, investment is needed, for which the structure was revised.
He said that last time, 75 percent of the shares were being privatized. In the privatization that is going to happen, a payment schedule has been given. Two-thirds of the payment will be made initially and the rest will be paid later. The remaining amount has also been secured. It has been ensured that the privatization process of PIA will be made clean and transparent.
The head of the Privatization Commission said that after the privatization of PIA, the path for the privatization of other institutions will be paved. The government had decided in April that 51 to 100 percent shares would be sold. We wanted as many bidders as possible to come forward. The current bid for PIA is 75 percent. The buyer will also be able to buy other shares. The government will get seven percent of the PIA purchase amount.
Investment is needed in PIA to regain its lost ground. Last time, 15 percent was to be given to the government. The buyer will have to make two-thirds of the initial investment in the remaining one year. If the buyer wants, they can add two more companies with government permission. Advertisements should be published in local and foreign newspapers for the privatization of PIA.
Meanwhile, the consortium comprising Lucky Cement bid Rs 101.5 billion for the purchase of PIA, the Air Blue Consortium bid Rs 26.5 billion for the purchase of PIA, while the Arif Habib Consortium bid the highest at Rs 115 billion for the purchase of PIA.
