Islamabad:
The richest and most connected companies of Pakistan, having interests in the cement, power, fertilizer and real estate sectors have expressed their interest in acquiring international airlines in Pakistan, which increases the prospects for the success of the second attempt to privatize the entity.
The main groups of companies in the country, The Lucky Cement, ARIF Habib Conglomerate and Hub Power presented themselves to bid for the acquisition of a majority of participations from the International Pakistani airline. Among the interested parties is Fauji Engrtilizer Company, the Commercial Foundation of the Army and the Bahria, which belongs to Pakistan Navy.
According to a press release published by the privatization committee on Thursday, five parties submitted both the expression of interests and the statement of qualifications to the prolonged deadline.
Most of these parties are rich in resources and have appropriate links, which increases the prospects for healthy competition.
Our goal is to transmit PIA to a consortium, which can make it a truly global organization, said Muhammad Ali, Prime Minister’s advisor on privatization on Thursday.
The privatization committee had invited the expression of interests for the divestment of 51 to 100% of Piacl’s share capital as well as management control. This is the second attempt to privatize the airline after the failure of the first offer last year.
The commission said that eight parties had expressed interests, but five of them submitted the qualification declaration. The AKD group, Habib Rave Engineering and Sardar Muhammad Ashraf D. Baloch (Pvt.) Limited did not submit the qualifications.
The Commission also said that among the parties that submitted the two compulsory documents is the consortium including Lucky Cement Limited, Hub Power Holdings Limited, Kohat Cement Company Limited and Metro Ventures (Private) Limited. This consortium includes some of the richest individuals.
The second consortium includes ARIF Habib Corporation Limited, Fatima Fertilizer Company Limited, City Schools (Private) Limited and Lake City Holdings (Private) Limited.
The Fauji Garilizer Company Limited also submitted documents after months of speculation that the trade enterprise of the army wanted to acquire the airline.
The other two parts are Air Blue and a consortium including increased Securities & Investments (Private) Limited and Serene Air (Private) Limited, Bahria Foundation, Mega C&S Holding, Equitas Capital LLC.
The SOQs submitted by the parties will be assessed by the privatization commission against the prequalification criteria and the prequalified parties will come to the next step where they will have access to the virtual data room to undertake the reasonable diligence of the purchase, according to the privatization commission.
Muhammad Ali said that due to the improvement in finance and other developments, the PIA assessment and the minimum reserve price would be revised.
During the last attempt, the government had set the minimum price at 85.03 billion rupees with a negative balance sheet of 45 billion rupees. Now the government has taken more debts from the balance sheet, which should have a positive impact on the minimum price.
PIA auction should now take place in the last quarter (October-December) of this year, said Muhammad Ali, the Prime Minister’s adviser on privatization.
The first attempt to privatize the PIA in October of last year failed because the government ended up with a single tenderer. Two other tenderers fell due to disagreements on tax exemptions and cleaning the remaining balance sheet.
The government of Prime Minister Shehbaz Sharif has not been able to privatize a single entity in its first year in power. The government has again set a very modest objective of generating 85 billion rupees from privatization products in the next financial year.
The International Monetary Fund has enabled Pakistan to give up 18% sales tax on the rental of the plane and withdraw 45 billion rupees from RS Lebability from the PIA balance sheet before its privatization. The opening of European roads is considered to be major incentives for the success of the second offer on privatization, although the UK road is still closed.
The privatization advisor said that the Commission was satisfied with the interest and the seriousness manifested by potential bidders. He said that all the outstanding problems would be resolved and that the transaction should be closed during this calendar year.
