PIA Privatisation: Arif Habib consortium wins bid – Pakistan & Gulf Economist

The government on Tuesday sold its 75 percent stakes in the Pakistan International Airlines (PIA) for Rs10.1 billion cash to business tycoon Arif Habib-led consortium, marking the completion of the first major privatisation transaction in two decades by offloading the white elephant.

The consortium of Arif Habib, Fawad Ahmed Mukhtar, Gohar Ejaz and Aqeel Karim Dhedhi – Pakistan’s renowned businesspersons, placed the highest bid of Rs135 billion for the 75 percent shares in the 13th round of open auction. It beat another cash-rich consortium led Muhammad Ali Tabba.

The Air Blue was disqualified for the open bidding after it offered Rs26.5 billion, which was nearly three-fourth less than the minimum price of Rs100 billion. The government had set a very low minimum price, even compared to the last failed attempt when it asked for Rs85 billion for 60 percent shares when the entity had negative equity.

Out of the Rs135 billion, the government will get Rs10 billion ($36 million) and the remaining amount will be invested in the Pakistan International Airlines (PIA) by the successful bidder, said Muhammad Ali, the adviser to prime minister on privatisation after the auction.

It was the second attempt to sell the PIA in over one year and marks the first successful transaction since 2005 when the government had sold K Electric, the country’s largest power distribution company. Prime Minister Shehbaz Sharif had desired that the PIA should be sold for Rs200 billion.

During the Cabinet Committee on Privatisation meeting, which approved the minimum sale price, one of the cabinet ministers advocated selling PIA at any cost to get rid of the bleeding entity. The government took out Rs670 billion from the books of PIA, which will now be serviced by the taxpayers. For the current fiscal year, the government has estimated Rs35 billion in debt servicing cost, which will continue for at least six more years.