PIA privatisation: Lone bidder places only Rs10bn bid for stake in national airline

The final bidding process for the privatization of Pakistan International Airlines (PIA) has seen a lack of competition, with only one bid submitted for a 60% stake in the Cash-strapped national carrier.

The bid, placed by the real estate development company Blue World City, amounts to 10 billion Pakistani rupees, approximately $36 million. This offer falls significantly short of the government’s minimum asking price of 85 billion Pakistani rupees.

The Pakistani government had pre-qualified six groups in June for the bidding, but Blue World City was the only participant. With PIA heavily in debt, the government aims to sell a 51-100% stake in the airline to generate funds and implement reforms as part of a $7 billion International Monetary Fund program.

PIA lone bidder to launch own airline if deal fails

The Privatisation Commission has requested Blue World City to adjust their bid to meet the minimum requirement. However, the company’s chairman, Saad Nazir, expressed reluctance to increase the offer, stating that it does not make financial sense, according to Reuters.

Nazir suggested that if the government does not accept their bid, they may consider starting their own airline.

“We wish the government all the best if they don’t want to accept our bid,” he said.

Potential bidders have voiced concerns regarding the government's ability to uphold long-term agreements for PIA, particularly given the reliance on a coalition government led by Prime Minister Shehbaz Sharif.

Some executives worry about policy stability, especially following recent government actions, such as terminating contracts with private power companies. Such decisions raise doubts about the security of investments in Pakistan.

Moreover, issues such as inconsistent communication from the government, unfavorable terms and taxation in the airline sector, and PIA’s historical challenges and reputation have further deterred potential bidders.