Islamabad, Mar 11, 2025: Pakistan has pledged to the International Monetary Fund (IMF) that it will privatize Pakistan International Airlines (PIA) by July 2025, while decisions on the Roosevelt Hotel in New York remain pending.
The uncertainty follows the United States’ move to prematurely terminate a $228 million lease agreement.
According to reports, the government intends to privatize between five and seven state-owned enterprises, including PIA, three financial institutions, and three power distribution companies.
Officials are optimistic that the privatization of Zarai Taraqiati Bank Limited (ZTBL) will be completed by November.
Government representatives informed the IMF that the Cabinet Committee on Privatization (CCOP) will decide whether to sell the Roosevelt Hotel outright or establish a joint lease agreement.
The PIA-owned hotel, which boasts 1,025 rooms, stands in one of the most valuable real estate locations globally.
In July 2023, the Pakistani government leased the hotel to the Immigrant Housing Business through New York City for three years.
However, New York authorities recently announced plans to terminate the lease by July 2024, a full year ahead of schedule.
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This unexpected termination is estimated to result in revenue losses of approximately $80 million, as the city government had been paying $210 per room for the final year of the contract.
Last November, CCOP anticipated that U.S. immigration policies might impact the lease agreement. Now, officials are considering alternative business opportunities for the hotel.
The privatization strategy for Roosevelt Hotel is currently under review by a committee led by Ali Pervaiz Malik, the Federal Minister for Petroleum.
This committee has recommended an open bidding process, as Saudi Arabia has shown no formal interest in acquiring the property.
The Privatization Commission previously stated that under government-to-government transactions, foreign nations must formally declare interest before invoking the Inter-Governmental Commercial Transaction Act.
As of December, no foreign government had officially expressed interest in acquiring the hotel.
Meanwhile, the government is reassessing investor sentiment before issuing an Expression of Interest for PIA.
We have identified three potential bidders, including two who previously withdrew when the government refused to waive an 18% sales tax on aircraft leases and remove Rs.45 billion in liabilities from PIA’s financial records.
The IMF has now agreed to relax these conditions, alongside reopening European routes, to make the airline’s privatization more attractive.
Additionally, the UAE has expressed interest in acquiring First Women Bank Limited as a full-service commercial bank.
However, it prefers a government-to-government transaction rather than open bidding.
The government is also in the process of hiring a financial advisor for ZTBL’s sale, with plans to finalize the transaction by November.
Meanwhile, the government expects to sell House Building Finance Company next month after previous unsuccessful attempts.
