Islamabad: Efforts to revive the debt-ridden Pakistan International Airlines (PIA) through privatisation hit a roadblock as the government received only one bid for a 60% share in the auction which too was around PKR (Pakistani Rupee) 75 billion lower than the expected cost.
The Blue World City consortium submitted a bid of PKR 10 billion (300 crore INR), significantly below the Privatisation Commission’s minimum price of PKR 85.03 billion. To understand in Indian Rupees, the quoted price and offered price had a difference of Rs 22,700 crore.
In June, the government had pre-qualified six groups, but ultimately only this real estate development company participated in the final bidding. This auction is part of Shehbaz Sharif’s government to let off loss-making entities as agreed in the International Monetary Fund’s (IMF) bailout package.
Due to the substantial gap between the expected and actual bids, the commission allowed the consortium additional time to reconsider. However, Blue World City consortium chairman Saad Nazir chose to keep the bid unchanged stating that Thursday’s bid was “in accordance with assessments” and that they stand by the quoted price, Dawn reported.
“We have considered the government price and decided to stand with our best price of PKR 10 billion,” said Saad Nazir, who owns the bidder company Blue World City.
The real estate developer was the sole bidder after five other pre-qualified contenders withdrew, citing the government’s strict requirements regarding tax liabilities, guaranteed investments, and employee retention.
Nazir said if the government does not privatise the PIA, they wish them all the best and would pray if they want to run the airline themselves. He later reiterated his bid, saying it didn’t make commercial sense to raise the quoted price.
The bidding process, conducted in Islamabad on Thursday, took place in two phases. In the first phase, the sole bidder, Blue World City consortium, submitted its bid, which was then opened hours later in the second phase.
The government initially offered a stake range of 51% to 100% but decided to sell a 60% share. It also rejected bidders’ requests for reduced duties and tax waivers, instead requiring the buyer to invest between $500 million and $700 million to maintain PIA’s operational sustainability, as reported by the Express Tribune.
The commission explained that in the event of a sole bidder, and if the bid price was less than the government’s expectation, the commission could decide “whether to continue the bidding process” or request the bidder “to match its bid price with the minimum expectations” of the commission.“
If the bidder declines the commission’s request or submits a revised bid which is still lower than the expected price, the bidding process will stop, and the commission will ask the federal cabinet for approval, as per the rules.
The commission clarified that if there is only one bidder and the bid falls short of the government’s expectations, it may choose either to “continue the bidding process” or request that the bidder “align its bid with the commission’s minimum expectations.”
Should the bidder decline this request or submit a revised bid that remains below the expected price, the bidding process will be halted, and the commission will seek approval from the federal cabinet, in accordance with the rules.
