https://arab.news/96xpd
- Plans to privatize national carrier hit a snag when bidding process last month attracted just one bid
- Al-Nihang’s will be responsible for PIA’s existing liabilities of $896 million, retain all employees for 3 years
KARACHI: A business group in Canada led by a Pakistani expat has offered the Pakistan government around Rs100 billion ($358 million) to acquire its debt-ridden national carrier, Pakistan International Airlines (PIA), a letter written by the group’s CEO earlier this month shows.
Cash-strapped Pakistan was looking to offload a 51-100 percent stake in debt-ridden PIA to raise funds and reform state-owned enterprises as envisaged under a $7 billion International Monetary Fund program. The process, however, hit a snag last month when the final bidding round attracted just one bid of Rs10 billion ($36 million) for a 60 percent stake in the national flag carrier.
The offer letter by the Al-Nihang’s Group, dated Nov. 3, has been sent to the ministries of aviation, defense and privatization as well as the Establishment Division and the Planning Commission.
“I am writing to formally present an offer to acquire PIA at a valuation of PKR 100 billion in recognition of its invaluable role as Pakistan’s national carrier,” Al-Nihang’s CEO Faqir Muhammad M Ali said in the letter.
“Al-Nihang’s Group will acquire the full shareholding of PIA in accordance with the terms outlined in the tender proposal, assuming comprehensive ownership.”
Among proposed acquisition conditions, the group will be responsible for PIA’s existing liabilities, amounting to approximately Rs250 billion ($896 million), and ensure all outstanding payments. It would also retain all current PIA employees for a period of 2-3 years and commit to continue paying salaries and benefits.
There has been no comment as yet from Pakistani authorities regarding the offer.
Little information could be found online about Al-Nihang’s group, but the website of the group’s CEO said he served as a magistrate in Jhang from 1992 to 1994, and was the youngest nominated senator in 1996. Since then, he has worked in the UK and Canada, where he helped negotiate an airline treaty between Pakistan and Canada and also served as the president of the Pakistan Canada Association of Hamilton, according to the website.
The government had pre-qualified six groups for PIA’s privatization process in June, but only real-estate development company Blue World City participated in the bidding process last month, placing a bid that was below the government-set minimum price of Rs85 billion ($304 million).
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.
Other concerns raised by potential bidders for the PIA stake included inconsistent government communication, unattractive terms and taxes on the sector, and the flag carrier’s legacy issues and reputation.