Islamabad:
The richest and well -connected business groups of Pakistan with interests in sectors of cement, energy, fertilizers and real estate have shown interest in acquiring the international Pakistan airlines that make losses, which increases the perspectives for the success of the second attempt to privatize the entity.
The main business groups of the country, the conglomerate of Lucky Cement, Arif Habib and Hub Power have presented an offer for the acquisition of most bets of the International Pakistan airline. Among the stakeholders are Fauji Fertilizer Company, the commercial company and the Bahria Foundation, which is owned by the Pakistan Navy.
According to a statement issued by the Privatization Commission on Thursday, five parties have submitted both the expression of interest and the declaration of qualifications to the extended deadline.
Most of these parties are rich in resources and have correct connections, which increases perspectives for healthy competition.
Our goal is to convey the PIA to a consortium, which can make it a truly global profitable organization, said Muhammad Ali, advisor to the Privatization Prime Minister on Thursday.
The Privatization Commission had invited the expression of interests for the divestment of 51 to 100 % of Piacl’s social capital together with the management control. It is the second attempt to privatize the airline after the first offer failed last year.
The commission said that eight parties had shown interest, but five of them presented the declaration of qualification. The AKD group, Habib Rafique Engineering and Sardar Muhammad Ashraf D. Baloch (PVT.) Limited did not present the declaration of qualifications.
The Commission also declared that among the parties presented both mandatory documents is the consortium comprised of Lucky Cement Limited, Hub Power Holdings Limited, Kohat Cement Company Limited and Metro Ventures (Private) Limited. This consortium includes some of the richest business people.
The second consortium comprises Arif Habib Corporation Limited, Fatima Fertilizer Company Limited, City Schools (private) Limited and Lake City Holdings (private) Limited.
Fauji Fertilizer Company Limited has also submitted documents after months of speculation that the military company was eager to acquire the airline.
The other two parties are Air Blue and a consortium comprising Augment Securities and Investments (Private) Limited and Serene Air (Private) Limited, Bahria Foundation, Mega C&S Holding, Equitas Capital LLC.
The SOQ presented by the parties will be evaluated by the privatization commission against the prequalification criteria and the prequalified parties will proceed to the next stage where they will be given access to the virtual data room to carry out the proper diligence of the purchase side, according to the privatization commission.
Muhammad Ali said that due to improved finances and other developments, the balance of the PIA and the minimum reserve price would be reviewed.
During the last attempt, the Government had established the minimum price at RS85.03 billion with a negative general balance of RS45 billion. Now, the Government has taken more debts from the balance sheet, which should positively affect the minimum price.
It is now expected that PIA’s tender will take place in the last quarter (October-December) this year, said Muhammad Ali, advisor to the Privatization Prime Minister.
The first attempt to privatize PIA in October last year failed because the government ended with only one bidder. Two other bidders retreated due to disagreements about fiscal exemptions and the elimination of the remaining balance.
The government of Prime Minister Shehbaz Sharif has not been able to privatize a single entity during his first year in power. The Government has again established a very modest objective of generating RS85 billion from privatization revenues in the next fiscal year.
The International Monetary Fund has allowed Pakistan to resign 18% of the sales tax on the lease of the aircraft and obtain the liabilities of RS45 billion of the PIA balance before its privatization. The opening of European routes is considered important incentives for the success of the second offer for privatization, although the United Kingdom route still remains closed.
The privatization advisor said the commission was happy with the interests and severity shown by possible improvements. He said that all pending problems would be solved and that the transaction is expected to close within this calendar year.
