<\/p>\n
ISLAMABAD: A successful bid of Rs135bn by Arif Habib won the auction for Pakistan International Airlines Corporation Ltd (PIAC) after the process moved to an open auction round at a ceremony in Islamabad, marking the country\u2019s first major privatisation in nearly two decades.<\/p>\n
Initially, pre-qualified bids were submitted by Lucky Cement, private airline Airblue and investment firm Arif Habib in the morning. Airblue exited the race after the first round of bidding, with a proposition lower than the reference price of Rs100bn.<\/p>\n
In the first round, Lucky Cement put up a bid of Rs101.5bn, Airblue Rs26.5bn, and the Arif Habib consortium bid Rs115bn, after which the reference price was announced.<\/p>\n
Following that, a 30-minute break was taken so that the two top bidders could hold consultations. A second round was then commenced.<\/p>\n
It began with the base bid at Rs115bn, and the minimum increment was at Rs250 million. The base price was set on the basis of the highest bid made during the first round by Arif Habib.<\/p>\n
Both bidders engaged in a brief competition to outbid each other during the round. However, when Lucky Cement raised its bid to Rs134bn, Arif Habib countered with Rs135bn, forcing Lucky Cement to bow out and congratulate Arif Habib.<\/p>\n The whole process was telecast live and streamed across all TV channels as well as the respective social media handles of the government.<\/p>\n Adviser to the prime minister on privatisation, Muhammad Ali, will also hold a press conference after the conclusion of the bidding process.<\/p>\n After winning the bid to acquire the national airline, business owner Arif Habib said the privatisation will \u201cpromote\u201d investment in the country.<\/p>\n \u201cPIA is our national institution,\u201d Habib said.<\/p>\n \u201cThe national airline has witnessed days of glory and was once ranked number two in the world. All its employees are very competent,\u201d he added.<\/p>\n Habib said he is hopeful of resolving all shortcomings with the new capital investment.<\/p>\n When asked about his expansion plans, he said, \u201cInitially, we plan to expand the fleet to 38 aircraft in the first phase, then to 65, depending on demand.\u201d<\/p>\n The successful bidder assured he would give \u201cconfidence to PIA employees\u201d and help in \u201crealising their potential.\u201d<\/p>\n \u201cEmployment opportunities will grow as we expand,\u201d Habib said. \u201cThe existing experienced employees will also get opportunities.\u201d<\/p>\n \u201cWhen all necessary capital investment is made, they will perform well.\u201d<\/p>\n Khaqan Najeeb, a seasoned economist and policy expert, hailed the privatisation as a \u201csought-after\u201d micro-economic reform that \u201cmust take place\u201d.<\/p>\n Talking to Geo News,<\/em> Najeed said, \u201cIt is a very good start that after 19-20 years, we have successfully privatised a major institution.\u201d<\/p>\n \u201cWe have achieved this milestone on the third attempt. We must always remember that, despite parking Rs650 billion \u2013 not a small amount \u2013 in a holding company, it couldn\u2019t be achieved,\u201d he said.<\/p>\n \u201cAfter removing a liability of Rs33 billion from the balance sheet of PIA and adding various other incentives in the form of tax or other concessions, only then have we made this happen,\u201d Najeeb said.<\/p>\n The economist termed the development a \u201cgood outcome\u201d and \u201cpositive\u201d for the national airline.<\/p>\n \u201cHowever, we achieved this by offering tax favours, deferred credits, and creating positive equities,\u201d he said.<\/p>\n \u201cWe must notice that, as a good sweetener, it was necessary to reinvest 92.5% of the sold 75% in PIA, while only giving 7.5% to the state to run the company, because it is in need of significant funds to manage its affairs.\u201d<\/p>\n \u201cThe company needs money to grow despite having multiple landing rights and air services agreements.\u201d<\/p>\n He highlighted that the national airline has 18 planes in its fleet and carries four million passengers, but \u201cit will not be enough to achieve economies of scale.\u201d<\/p>\n \u201cWe have to reconsider how we have supported our SOEs, giving repeated sweeteners and unnecessary concessions, while selling a national airline that holds dozens of landing rights.\u201d<\/p>\n Najeeb said that if anyone runs this company with \u201cfinancial muscle,\u201d a hidden value could be rediscovered. \u201cI hope that when we finalise this deal, we will design a proper business and investment plan to expand the current fleet from 18 to 50 aeroplanes, reach further destinations, and carry more passengers,\u201d he said.<\/p>\n \u201cIt\u2019s a long way to go.\u201d<\/p>\n Labelling the development as \u201cpositive,\u201d he added, \u201cThere was a time when we were losing Rs50 to Rs100 billion. We can now avoid such losses \u2013 a good way to save taxpayers\u2019 money.\u201d<\/p>\n \u201cHowever,\u201d he reminded, \u201cwe have to keep in mind that for the Rs650 billion parked in the holding company, we have to pay around Rs30 billion every year from taxpayers\u2019 money, according to estimates.\u201d<\/p>\n He remarked that an \u201coverhang\u201d exists in Pakistan\u2019s aviation policy, which has to be \u201cfixed.\u201d<\/p>\n The economist further stated the three important aspects of a good economy. \u201cThe first is a good regulatory environment, the second is a smooth policy-making process, and the last is the efficiency of operations,\u201d he explained. \u201cThat\u2019s how the economy works.\u201d<\/p>\n Interior Minister Mohsin Naqvi congratulated all fellow countrymen on the privatisation of PIA.<\/p>\n \u201cPakistan has won today,\u201d he exclaimed.<\/p>\n \u201cBy the grace of God, the process has been conducted with transparency,\u201d Naqvi said.<\/p>\n He also extended felicitations to Advisor on Privatisation Mohammad Ali and his team, the prime minister, and especially to those who \u201csecured PIA\u201d.<\/p>\n \u201cWe are all looking forward to travelling through PIA again,\u201d he added.<\/p>\n \n <\/a>\n <\/p><\/blockquote>\n <\/span><\/div>\n<\/figure>\n The Ministry of Privatisation also congratulated the consortium for winning the auction.<\/p>\n Finance Minister Muhammad Aurangzeb, speaking at the bidding ceremony, thanked the PM\u2018s aide and his team for their efforts and hailed the bidding process in terms of transparency.<\/p>\n \u201cIt takes a lot of time and effort to get to a good place where we are today,\u201c he said.<\/p>\n \u201cAll of the bidders today are from Pakistan. I used to say that no matter which team wins, Pakistan would win.\u201d<\/p>\n He lauded Pakistan\u2018s biggest conglomerates for \u201cvying for the best airline\u201d and said that the flag carrier would be led by investors and some of Pakistan\u2019s most experienced businesspeople.<\/p>\n \u201cThe fact that they have stepped up is a doubtless sign that anyone who is the successful bidder will take it not only to where we were, but where we need to be in the comity of nations,\u201d Aurangzeb added.<\/p>\n \u201cWe need to stop the bleeding and losses, but more importantly, our institutions need to be part of the comity of nations, and we will take them there,\u201d he added.<\/p>\n Aurangzeb also expressed hope that the bidding would increase the number of local investors and, in turn, the number of foreign investors entering the country.<\/p>\n \u201cThe government, through the privatisation of business entities under state custody, will not only save itself from losses in the thousands of billions but also accelerate the process of economic recovery,\u201d he wrote, congratulating the privatisation commission.<\/p>\n Defence Minister Khawaja Asif took to X to celebrate the sale, calling it a \u201cgrowing vote of confidence in the national economy\u201d.<\/p>\n Asif added that Europe and the UK lifting bans on PIA\u2018s operations was a major contributor to the success of today\u2019s deal.<\/p>\n \u201cFrom a bid of Rs10bn in the past to a price of Rs135bn today, it is proof of trust in our Civil Aviation Regulator.\u201d<\/p>\n He also assailed the PTI government for leaving \u201cno stone unturned to destroy PIA\u201d, adding that it took three years to rebuild the flag carrier.<\/p>\n \n <\/a>\n <\/p><\/blockquote>\n <\/span><\/div>\n<\/figure>\n At the outset of the ceremony, the adviser to the prime minister on privatisation addressed the audience.<\/p>\n Ali hoped that PIA\u2019s privatisation would open \u201cpaths for investment in the country\u201d.<\/p>\n \u201cI would also like to thank all bidders who are present today, and those who were part of the bidding process but did not reach the final round. We wouldn\u2018t have been here without them, and this process wouldn\u2019t have been completed,\u201d he said.<\/p>\n \u201cWe actively engaged with all the bidders. Two of them demanded to take up to 75 per cent at least, and the other two demanded 100pc,\u201c he said.<\/p>\n \u201cWe wanted a multitude of bidders so the process of bidding would be transparent and competitive,\u201d he continued.<\/p>\n He said that the government had \u201cdecided to sell at least 75pc of shares, and simultaneously, we also decided to offer the other 25pc\u201d.<\/p>\n \u201cBidders will have the right to consider and let the government know if they also want to buy the other 25pc in the next 90 days,\u201d he said.<\/p>\n He further said, \u201cThe transaction would be from 75pc up to 100pc; however, 75pc of them will be made available for sale today\u201d.<\/p>\n \u201cThe government wanted to structure this transaction so it would also get a fair share and investment to be made,\u201d he said, adding that the government did not just want to sell PIA but \u201cto bring the national airline back to the glory it enjoyed in the past\u201d.<\/p>\n He stressed the need for bringing in \u201cnew investment, buy new carriers and repair the engine, cut the liabilities, pay the employees on time\u201d.<\/p>\n \u201cIf we want to expand the fleet from 18 planes to 30-40 or more, then investment is the only way,\u201d he added.<\/p>\n In the morning, representatives of the bidding groups had walked in one by one to deposit sealed offers into a transparent box, briefly fumbling as they pushed envelopes through the slot in a separate public ceremony in Islamabad that was also broadcast on state television.<\/p>\n Following that, the reference price for PIACL\u2019s bidding was approved by the Privatisation Commission Board and the Cabinet Committee on Privatisation after bids were received.<\/p>\n \n <\/a>\n <\/p><\/blockquote>\n <\/span><\/div>\n<\/figure>\n Meanwhile, speaking to the media, Ali said, \u201cGod willing, we will get a good bid, there will be good investment, and we will succeed.\u201c<\/p>\n The auction was Pakistan\u2019s second attempt at selling the once storied flag carrier after televised bidding last year collapsed when a solitary offer fell far below the government\u2018s reference price, derailing what would have been the country\u2019s first major privatisation in nearly two decades.<\/p>\n Meanwhile, Prime Minister Shehbaz Sharif, while addressing a meeting of the federal cabinet, thanked government officials and the Privatisation Commission for their role in the national carrier\u2019s privatisation.<\/p>\n He stressed that the process has been made \u201ctransparent\u201c, stating that it will be the \u201clargest transaction\u201d ever in Pakistan\u2019s history.<\/p>\n \u201cToday, as the bidding starts [..] the bids will come in sealed envelopes, there will be transparent boxes, there will be a live telecast. When the price is determined, the envelopes will be opened. They will compete, and whoever has the highest bid will [succeed],\u201c he said.<\/p>\n \u201cOnly God knows how high the bid will go, but the process must come back to the cabinet,\u201d he said.<\/p>\n Earlier, Ali said the two unsuccessful bidders will be excluded from any future role in the airline\u2019s management thanks to a unique stipulation.<\/p>\n In recent remarks, he explained that losing bidders will have no right to join the winning bidder, and only those groups who were not party to the auction would be able to join the new management.<\/p>\n This means that while only one of the three consortiums currently in the running for the flag carrier will become part of its administration upon acquisition of a majority stake, Fauji Fertiliser Company Ltd retains the option to join with them subsequently, if it wishes to.<\/p>\n<\/a>Privatisation will \u2018promote\u2019 investment<\/h2>\n
<\/a>\u2019A very good start\u201c<\/h2>\n
<\/a>\u2018Pakistan has won today\u2019<\/h2>\n
<\/a>Aurangzeb hopes PIA sale will bring investment<\/h2>\n
<\/a>Pre-qualified bids<\/h2>\n
<\/a>Unsuccessful bidders to be excluded from PIA management<\/h2>\n