The expressions of interest for the privatization of PIA, along with applications for qualification, have been filed by five consortia, with another three having dropped out. This is the second time PIA will go on sale, after last year’s failed sale, and the entries of Fauji Fertiliser and Bahria Foundation as parts of different consortia are of interest, indicating that the establishment does not want another failed sale. The PIA privatization, which is for between 51 percent and 100 percent of its shares and management control, is one of the conditions of the current IMF programme. A second failure could mean the sudden termination of not just the current programme, but also the $1 billion availed under the sustainability and relief fund. It would also mean that the government would have to keep on picking up PIA’s losses. It bodes well, though, that the airline turned its first profit in two decades in the onl financial result since the last fiasco. That attempt also occurred in the midst of the government’s renegotiating the agreements with independent power producers, and it was widely speculated that the treatment meted out to foreign investors spooked many of the potential buyers.
While none of the consortia were headed by foreign investors, they were certainly there in the background, not to mention that the sort of money needed for such a transaction can only be raised with the cooperation of foreign banks. The last auction was an abject failure because of the qualifying consortia, only one submitted a bid. That bid was for Rs 10 billion for a 60 percent stake. The reserve price had been set at Rs 85 billion, and thus the bid was rejected. The present attempt thus depends first of all on how many bidders qualify.
The government should realize that it is in a marketplace, and it is a seller of what potential buyers would dismissively describe as damaged goods. Everyone knows how desperately it wants to make a sale, and how the buyers, even those who took part in the previous auction, are now looking for easy pickings. PIA is a national asset, and thus represents public investment. The people have a right to expect due diligence.
