Over Rs2 billion spent on PIA’s privatisation with little progress 

ISLAMABAD: The government has spent over Rs2 billion from the national kitty on consultancy services for the privatisation of Pakistan International Airlines (PIA), as the process remains still incomplete, official documents reveal. 

The expenses, incurred under both the caretaker and current government, were primarily directed towards hiring international consultancy firms to assist in the auction of the PIA. 

The Pakistani government is again looking to sell the PIA after a failed auction attempt earlier last month.

The government is now considering a direct sale to other countries or going through the privatisation process.

In the previous attempt, for those unaware, the sole bid received was dismissed as it fell significantly short, offering just 8.5 times below the minimum asking price.

Speaking in the National Assembly, Federal Minister for Law and Justice Azam Nazeer Tarar expressed optimism about receiving improved bids this time, noting that the restoration of PIA routes to Europe was a positive development.

According to documents available with HUM Investigation Team, $1.35 million (approximately Rs380 million) was paid for facilitating the bidding process and attracting potential bidders. An additional $940,000 was paid to the consultancy firm for preparing a restructuring report. 

Around $940,000 were pent on drafting a memorandum and organising roadshows, while $625,000 were spent for finalising a scheme of arrangement with the Securities and Exchange Commission of Pakistan (SECP), and another $625,000 were paid to the consultancy firm for the project’s charter. 

Despite these spending, the privatisation could not ne completed and the PIA remains unsold.

The only bidder offered a mere Rs10 billion — a fraction of what the government had anticipated. 

The stalled process raises questions about the effectiveness of the privatisation strategy and its mounting financial burden on the public purse.

Prime Minister Shehbaz Sharif’s government, as part of a $7 billion loan deal with the International Monetary Fund (IMF), is working to restructure or sell off loss-making state entities, like PIA, to reduce the financial burden on the country.

The airline has been unprofitable for nearly 20 years and survives on government bailouts.

In an effort to make the sale more attractive, the government may wipe out the airline’s debt in the next attempt. Previously, it transferred three-fourths of PIA’s total debt—about Rs830 billion ($3 billion)—to government accounts. The airline had shortlisted six local groups for the auction, but only Blue World ended up placing a bid. Fly Jinnah, the local arm of Air Arabia, was also among the interested parties.