Pakistan set to shell out $7 million to foreign firm for PIA’s privatization

ISLAMABAD: The Pakistani government will pay $7 million to the foreign financial advisory firm, Ernst & Young, to oversee the privatization of Pakistan International Airlines (PIA), which is currently facing a total loss of more than Rs850 billion.

According to documents obtained by the Hum Investigation Team, the government will pay the firm $7 million, equivalent to about two billion Pakistani rupees, for its services. This marks the highest amount paid for the privatization process of any company in recent years.

The firm has already submitted its first-phase report to the Privatization Commission, including the project charter, implementation plan, and legal process. The government has initiated the process of remitting 25% of the compensation, or $1.75 million, to the firm upon the completion of the first phase.

In the second phase, the firm will present the scheme of arrangement plan and receive another $1.75 million. In the third phase, the firm will present the company filing application plan and receive $4.5 million. In the final stage, the firm will invite tender plans and companies for PIA privatization and receive $1.75 million.

Four international companies submitted their financial proposals for PIA privatization, with Ernst & Young being selected with the lowest bid of $7 million. Seabrey International proposed $23 million, Rothschild & Co proposed $28 million, and Houlihan Lokey withdrew from the race at the financial proposal stage.

PM Kakar for expediting privatisation of PIA

The government aims to expedite the privatization of PIA as the national airline struggles to cope with challenges in the aviation industry.

According to Caretaker Federal Minister for Privatization Fawad Hasan Fawad, E&Y had the lowest bid of $7 million among the four international firms that submitted their financial proposals. The other firms were Seabrey International ($23 million), Rothschild & Co. ($28 million), and Houlihan Lokey, which withdrew from the race at the financial proposal stage.

Fawad stated that the privatization process was transparent and video-recorded. The objective of hiring the foreign firm was to ensure that PIA, one of the major assets of the country, could be sold at the right price. He added that all stages of privatization, from the firm’s services to the tendering process, were video-recorded to prevent any allegations of mismanagement, nepotism, or corruption.