Pakistan: The Real Estate Development Company Blue World City submitted a bid of Rs10 billion to Pakistan International Airlines (PIA) on Thursday, the Privatization Ministry stated, without specifying the stake size.
According to the Privatization Ministry, the minimum expected price for PIA had been set by the government at Rs85 billion.
In Islamabad, bids opened at 6:30 p.m., and the process of bidding began at 1:30 p.m.
As part of a $7 billion IMF program, the nation wants to sell off a 51-100% stake in the debt-ridden PIA to raise money and fix bleeding state-owned businesses.
Six organizations had been prequalified by the government in June, but only Blue World City, a real estate development company, met the Tuesday deadline to submit the final documents necessary to participate in the process.
Under oath, representatives of three organizations that did not submit a bid told Reuters that they were concerned about the government’s capacity to maintain long-term commitments to the flag carrier.
One executive expressed concern regarding policy continuity following the election of a new government. A coalition of disparate political parties has been the backbone of Prime Minister Shehbaz Sharif’s administration.
Given the likely number of layoffs that would follow, previous governments have avoided disposing of PIA because it has been extremely unpopular.
The government’s termination of power purchase contracts with five private companies earlier this month and the process of renegotiating other sovereign guaranteed pacts are the root causes of these concerns regarding policy continuity and contract compliance.
According to Sakib Sherani, an economist who heads the private company Macro Economic Insights, modifications to Pakistan’s ten-year agreements with private IPP projects to address chronic power shortages “raise the risk of investing as well as doing business in Pakistan, even in the presence of sovereign contracts as well as guarantees.” These projects are largely funded by foreign lenders.
In addition to PIA’s legacy issues and reputation, potential bidders raised inconsistent government communication, unattractive terms, and sector-specific taxes.
