ISLAMABAD: A Cabinet body, on Friday, ( Oct 06) approved the invocation of an emergency regulation to directly hire financial advisors for the privatisation of Pakistan International Airlines (PIA), with the aim of preparing the loss-making entity for sale within the next four months.
The Cabinet Committee on Privatisation (CCOP) decided to hire an international financial advisor by directly inviting proposals from the top 25 global financial firms, bypassing the need for open bids through advertisements. This decision is expected to expedite the process by approximately two months, allowing for the preparation of the transaction structure and other milestones to be completed by January next year. January is the target month for the start of the bidding process under the interim government.
Next week, Pakistan plans to directly send documents to the top 25 firms using the Table of League mechanism. These firms will be requested to submit proposals for creating a transaction structure for the sale of a majority stake in PIA.
To streamline the hiring of financial advisors, the CCOP decided to invoke the emergency regulation of the Appointments of Financial Advisors regulations. PIA incurred losses of Rs86 billion last year, and this year’s estimate is a staggering Rs153 billion, making privatisation or grounding the airline a necessity.
Just hours before the CCOP meeting, the Privatisation Commission board, also chaired by Fawad Hasan Fawad, declared PIA privatisation a major transaction. This declaration met the requirement for invoking the emergency regulation, which was subsequently endorsed by the CCOP.
The decision to appoint Fawad as chairman of both the board and the CCOP has effectively minimised the cabinet body’s role as an oversight entity.
The meetings of the privatisation commission and CCOP were purely ceremonial, as the decision to proceed with the Table of League route had already been made two days prior by the military-dominated Special Investment Facilitation Council (SIFC).
The government is considering selling at least 51% of the shares, along with management control, of PIA, preferably to a local investor. One Pakistani airline has already expressed interest in acquiring PIA and formally communicated with the privatisation commission.
