The government said on Tuesday that the new buyer of Pakistan International Airlines needed to invest up to 70 billion rupees in the loss airline over a period of five years, but the final investment needs would only be assessed after audited accounts are available next month.
The secretary of the privatization committee, Usman Bajwa, said that new investors should invest 60 billion rupees at 70 billion rupees over the five years. He made the declaration during a meeting of the Senate Committee on privatization, which was chaired by Senator Dr Afnan Ullah Khan of the PML-N.
USMAN BAJWA said new investments will aim for financial recovery, operational improvements and increase in the size of the fleet.
During the last unsuccessful attempt to privatize the PIA, the government set the investment limit at $ 300 million and the new limit appeared on the lower side compared to the last time. One of the possible reasons may be the hypothesis of better profitability due to the opening of international roads to Europe and in the United Kingdom and tax exemptions on the lease of planes.
Usman Bajwa said the PIA decided to start the flights to Manchester from August 14 after the United Kingdom has lifted the ban on PIA flights. The ban was imposed after the last PTI government said that the PIA pilots had false diplomas.
The adviser of the Prime Minister of Privatization Muhammad Ali said after the meeting that the total investment requirements of airlines would be assessed once the financial accounts verified for the end of June will be available by the middle of next month.
The secretary’s privatization said that there were security problems concerning PIA roads in North America, but efforts were underway to respond and erase these concerns.
The investor will keep 85% of the amount of the offer to invest money in the airline. The government will only obtain 15% of the money of the offer.
The age of the PIA fleet also increased to 18 and a half years and the new investor should double the fleet within five years, said the secretary. PIA CEO said at the beginning of the month that the airline was currently driving 19 planes.
The government had previously said that the PIA had shown 26 billion profit rupees last year, but a report from the Ministry of Finance had broken out the complaint and said that the airline had in fact undergone a net loss of 4.6 billion rupees and a “unique accounting benefit” of RS26 billion due to the treatment of past losses ” operational profit “.
The government wants to sell 51% to 100% participations with management control. He also tried to privatize the PIA last year, but ended up receiving an offer of 10 billion rupees against 85.03 billion rupees minimum.
The Standing Committee also examined a report highlighting the complaints of Piacl retirees. It was also revealed that retirement liabilities for 6,625 PIA employees amounted to Rs14. 9 billion. Expressing concern, the president of the chairman committee, Dr. Afnan Ullah Khan, pointed out that the amount of the pension was extremely weak, asking how people should survive.
In response, the Ministry of Privatization said that retirement policies are regularly revised and updated annually in accordance with allowances. The president ordered that the grade and scale pension details, including the amount received and the distribution process, be presented at the next Committee meeting
The secretary said that the reasonable diligence process for pre-qualified companies had started and that field visits would start soon. He said that from next week; Prequalified companies will make visits to the site and will participate in expert sessions. These sessions will include briefings on the conditions and routes of planes, as indicated by Usman Bajwa.
The managers of the privatization committee said that the current PIA business model was not sustainable. They declared that the prospects for privatization increased after 45 billion rupees of additional value of additional responsibilities in the PIA balance sheet and parked in the new portfolio company.
They said the last unsuccessful attempt would not affect the new tender process. The privatization of the secretary said that the government previously provided 100 billion rupees per year to maintain the operational PIA.
The committee has been informed that Pakistan Minerals Development Corporation (PMDC) is not yet included in the privatization list. Senator Zeeshan Khanzada asked why this institution was privatized.
The senators also questioned the basis of the privatization decision, noting that the Ministry of Petroleum does not have the mandate to privatize the PMDC.
With regard to Zarai Taraqiati Bank Limited (ZTBL), the committee was informed that it was included in the first phase of the privatization list approved by the government in August 2024. ZTBL is currently hiring a financial advisor.
The President’s committee questioned the delay in the hiring of a financial advisor, noting that the last meeting was held on January 31, when the offers were submitted and evaluated. He expressed his concern that almost six months had passed without finalizing the appointment. The ministry replied that the process generally takes six to eight weeks, but has been delayed due to the demand for high costs of almost 500 million rupees, which requires restarting the process.
