The Privatisation Commission decided on Thursday to again conduct the bidding process for the Pakistan International Airlines after attracting only worth Rs10 billion bid for the national flag carrier against the valuation of Rs85 billion.

Cash-strapped Pakistan is looking to offload a 51-100% stake in debt-ridden PIA to raise funds and reform bleeding state-owned enterprises as envisaged under a $7 billion International Monetary Fund programme.

The bidding process began at 1:30pm and bids opened 6:30pm in Islamabad.

The Privatisation Commission had requested a minimum bid of Rs85 billion, but the only bid submitted amounts to just Rs10 billion.

Initially, the commission had deemed six bidders eligible, allowing them to participate in the bidding for the loss-making national carrier. But five of such bidders have opted out of the process.

The government had shortlisted the following companies for majority shares in the national airline: Air Blue Limited, Arif Habib Corporation Limited, Fly Jinnah, YB Holdings Private, Pak Ethanol Private, and the Real Estate Consortium Blue World City.

Sources told Aaj News that no other group submitted documents for bidding apart from the Blue World City Consortium, which has placed a bid of Rs10 billion for the national flag carrier’s privatisation.

After a detailed review, the Privatisation Commission’s board shortlisted companies based on their technical, financial, and documentary requirements, qualifying them for the next stage of the bidding process.

Successful bidders would be eligible to acquire between 51% to 100% of PIA’s share capital.

It merits mentioning that the national carrier is a public limited company, with approximately 96% of its capital owned by the government.

PIA operates in various business sectors, including passenger services, ground handling, flight training, cargo, engineering, and in-flight catering.

Why did three groups chose not to bid?

Saad Nazir, chairman of real-estate development company Blue World City confirmed to Reuters in a text message that his group placed a bid at a ceremony at a hotel in Islamabad.

The government had pre-qualified six groups in June, but only Blue World City met a Tuesday deadline to submit final documents to participate in the process.

Officials from three groups that chose not to bid told Reuters on condition of anonymity that there were concerns about the government’s ability to stand by agreements made for the flag carrier in the long term.

One executive voiced concern about policy continuity once a new government came in. The government of Prime Minister Shehbaz Sharif has relied on a coalition of disparate political parties.

The disposal of PIA is a step former governments have steered away from as it has been highly unpopular given the number of layoffs that would likely result from it.

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Underpinning these concerns over policy continuity and honouring contracts was the government’s termination of power purchase contracts with five private companies earlier this month, as well as the process of re-negotiating other sovereign guaranteed pacts.

Changes in Pakistan’s decade-old agreements with private IPP projects, largely financed by foreign lenders, to address chronic power shortages, “raises the risk of investing as well as doing business in Pakistan, even in the presence of sovereign contracts as well as guarantees,” said Sakib Sherani, an economist who heads private firm Macro Economic Insights.

Other concerns raised by potential bidders included inconsistent government communication, unattractive terms and taxes on the sector, in addition to PIA’s legacy issues and reputation.

Prior to the bidding for privatisation, a meeting of the Cabinet’s Privatization Committee was held under the chairmanship of Deputy Prime Minister Ishaq Dar. It approved the sale of 60% shares of PIA was approved.

Sources stated that the committee also approved the reference price for the PIA privatisation.