The privatization of Pakistan International Airlines (PIA) faced a setback on Thursday after the only bid submitted was significantly lower than the government’s expectations. The Blue World City consortium offered Rs10 billion, far below the minimum price of Rs85.03 billion set by the Privatisation Commission.
Key Points
- Bid Details: The Blue World City consortium’s bid was Rs75 billion short of the government’s expectations.
- Government Reaction: The Privatisation Commission has allowed the consortium more time to reconsider its bid, but the chairman, Saad Nazir, has maintained the original amount.
- Concerns Raised: Nazir stated that increasing the bid does not make commercial sense for an airline with “significant leakages.”
- Political and Public Backlash: Politicians and labor unions have voiced strong opposition to the privatization process, with claims of unfair practices.
Background
The privatization process began with six pre-qualified groups in June, but only Blue World City participated in the final bidding. The bidding consisted of two phases: the submission of bids and their opening. According to the rules, if the sole bid is below expectations, the commission can either continue the process or ask the bidder to revise their offer.
Nazir emphasized that their bid reflects a realistic assessment of PIA’s financial situation, suggesting the government’s valuation is flawed. He also warned that if their bid isn’t accepted, they might start their own airline.
Political and Union Reactions
The bidding has drawn criticism from various political factions and labor organizations. The PIA Employees Union has filed a petition against the privatization, claiming it violates procurement regulations. The Pakistan Peoples Party (PPP), a government ally, accused the Privatisation Commission of sidelining Parliament during the process.
Chaudhry Manzoor Ahmed, head of the PPP’s labor wing, argued that PIA could be profitable with better management and more aircraft. Protests have been threatened by labor groups against the privatization plans.
What’s Next?
The Privatisation Commission is set to seek approval from the federal cabinet regarding the bid. If the cabinet rejects the bid, the future of PIA’s privatization remains uncertain, with the possibility of alternative plans from the Blue World City consortium.
