Pakistan's Privatisation Committee is attempting to streamline the state-owned entity sale process, an outcome that may hasten the partial privatisation of PIA - Pakistan International Airlines (PK, Islamabad International). New draft regulations allow direct negotiations with foreign entities and the setting of a floor price through a competitive process.
The proposed new regulations are formally known as the Privatisation Commission (Government to Government Agreement Mode – Manner and Procedure) Rules, 2023. The objective is to relax procedural requirements for selling state-owned entities like PIA. However, the Cabinet Committee on Legislative Cases must still approve the draft rules.
Pakistan's Express Tribune reports this is the second significant move by the Privatisation Committee to attempt to speed up the partial privatisation of PIA. Earlier this year, the government board proposed ending the role of the country's high courts in privatisation transactions.
The Pakistani government is attempting to partially privatise the perennially loss-making carrier. The proposal is to peal off PIA's USD1.6 billion plus debt into a separate entity and establish a public-private partnership with a foreign airline. That airline would then take a 40% stake in PIA in return for investing a significant amount of capital and taking day-to-day control of it. In addition to its current debts, PIA has accrued more than PKR600 billion rupees (USD2.14 billion) in losses.
The government has recently retained a consortium led by Ernst & Young to advise on the financial aspects of the sale process. Pakistani media outlets report that the consortium is receiving around USD7 million for their help, with 30% of that amount to be paid after PIA's partial privatisation.
