Privatization Commission approves structure for 51pc stake sale in PIA

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ISLAMABAD (UNA): The Privatization Commission Board, chaired by Minister Fawad Hasan Fawad, has greenlit the transaction structure for the sale of a 51% stake in Pakistan International Airlines (PIA). Ernst & Young-led consortium presented the proposal, suggesting the sale of the majority stake along with the division of PIA’s assets and liabilities.

Despite the government’s eagerness for foreign buyers, legal hurdles have surfaced, preventing the sale of a substantial number of shares to overseas investors. Government sources reveal that at least 51% of shares have received approval, with plans to involve a local partner once legal complications are resolved, emphasizing a sale with management control.

The caretaker government’s endeavors to privatize PIA face a hurdle due to pending dues of 281 billion rupees. The matter, now approved by the board, will be presented to the Privatization Committee of the Cabinet before reaching the caretaker federal cabinet.

The advisory report, currently incomplete, lacks the valuation of PIA’s assets, with a deadline set for the third week of January.

Financial advisers recommend granting the new buyer the option to terminate employees after one year, with proposals to extend this period to three years. Additionally, it is suggested to consolidate non-core assets and liabilities in a holding company, making the federal government responsible for debt and interest payments.

Financial advisers propose transferring 640 billion rupees to the new holding company, covering loans from the federal government and commercial banks. Core assets proposed for sale include PIA’s properties, foreign hotels, engineering services, and international routes.

Furthermore, consultants suggest that the holding company’s debt of 600 billion rupees should be settled from privatization proceeds, Aqor Hotel property sales, and future profits, a proposal met with opposition.

 

 

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