Pakistan International Airlines’ (PIA) flights to the United States are expected to resume this year, as talks are underway with US authorities to lift the existing ban, the Privatization Secretary told a parliamentary committee on Friday.
Briefing the Senate Standing Committee on Privatization, chaired by Senator Afnanullah Khan, Secretary Privatization Commission Usman Bajwa said PIA’s direct flights to the United Kingdom have already resumed, while negotiations are ongoing to reopen US routes.
During the meeting, the committee was informed that 24 government-owned institutions are planned to be privatized this year. The privatization list also includes three major airports, while the process for privatizing five power distribution companies (DISCOs) and two generation companies (GENCOs) has already begun.
The secretary said the prime minister has directed an increase in the capacity of the Privatization Commission and instructed that the overall privatization program be fast-tracked. According to the briefing, the commission currently has six consultants and plans to hire top market consultants to support the expanded workload.
Addressing concerns raised by Senator Umar Farooq over PIA’s privatization, the committee chairman said the national airline had been incurring losses of around Rs100 billion annually.
“Now that it is being privatized, objections are being raised,” he remarked, adding that with a total federal budget of Rs17,000 billion, saving even Rs900 billion would be a significant achievement.
The committee was told that no concessions were granted to any of the bidders for PIA. The Privatization Secretary said although a petition against the Arif Habib Group is pending in the Supreme Court, it does not constitute grounds for disqualification.
He added that all bidders were scrutinized by the Financial Monitoring Unit, while reports were obtained from the World Bank, the Federal Board of Revenue (FBR), and other relevant institutions.
According to the briefing, the Arif Habib Consortium has extensive business management experience and has hired US-based Seabreeze Aviation Consultancy to support its bid. The secretary clarified that the Military Foundation is not part of the consortium. Under the proposed structure, the government will retain a 25 percent shareholding in PIA, valued at approximately Rs45 billion.
The committee was informed that the financial close of PIA’s privatization is expected within three months. The consortium is set to invest Rs125 billion in the airline and deposit Rs10 billion with the government within the same period. The Privatization Secretary said PIA’s current valuation stands at Rs9 billion, which is projected to increase to Rs180 billion after the financial close.
The business plan for PIA will be presented within a month, while the airline’s fleet is expected to expand to 40 aircraft over the next four years. The secretary noted that shutting down PIA would have cost the government around Rs300 billion, including liabilities and Rs34 billion in payments to pensioners.
He said that privatization was a more viable option than closure, as it would prevent further fiscal losses while ensuring continuity of national air services.
Reporter: Waqas Azeem