ISLAMABAD: The government has announced that the new buyer of Pakistan International Airlines (PIA) will need to invest up to Rs70 billion over five years to revive the loss-making airline. The final investment amount will be determined after PIA’s audited financial accounts are available next month.
Privatisation Commission Secretary Usman Bajwa told the Senate Standing Committee on Privatization that the investment, estimated at Rs60 billion to Rs70 billion, will focus on financial recovery, operational improvements, and expanding the airline’s fleet. The committee was chaired by Senator Dr. Afnan Ullah Khan.
Bajwa added that PIA plans to resume flights to Manchester starting August 14, following the United Kingdom’s decision to lift a ban on PIA flights. The ban was imposed after claims of fraudulent pilot degrees during the previous PTI government. Efforts are also underway to address security concerns for PIA’s North America routes.
The advisor to the Prime Minister on Privatisation, Muhammad Ali, stated that PIA’s total investment needs will be finalized once the audited accounts for June are available by mid-August. The new investor will retain 85% of the bid amount for airline investment, with the government receiving 15%.
PIA’s fleet, currently at 19 aircraft with an average age of 18.5 years, must be doubled within five years, according to Bajwa. The government aims to sell 51% to 100% of PIA’s stakes, along with management control. A previous privatization attempt last year failed after receiving a Rs10 billion bid against a minimum price of Rs85.03 billion.
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The committee also reviewed PIA’s pension liabilities, which amount to Rs14.9 billion for 6,625 employees. Senator Khan expressed concern over the low pension amounts and directed the ministry to provide detailed pension information at the next meeting. The Ministry of Privatization noted that pension policies are revised annually.
Bajwa said the due diligence process for pre-qualified companies has started, with site visits and expert sessions on aircraft conditions and routes scheduled to begin next week. The Privatisation Commission stated that PIA’s current business model is unsustainable, but privatization prospects have improved after transferring Rs45 billion in liabilities to a new holding company.
The committee was also informed that the Pakistan Minerals Development Corporation (PMDC) is not currently on the privatization list, despite questions from senators about its inclusion. Regarding Zarai Taraqiati Bank Limited (ZTBL), listed for privatization in August 2024, the hiring of a financial advisor is delayed due to high fee demands, with the process expected to restart soon.
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