Islamabad, Feb 14: Prime Minister Shehbaz Sharif has expedited the privatisation process of Pakistan International Airlines (PIA), moving the financial closure deadline up to June 1, 2025, from the previously scheduled October target. This decision is part of broader economic reforms aimed at reducing the financial burden on the state and improving the efficiency of state-owned enterprises.
As part of the revised plan, the International Monetary Fund (IMF) has agreed to waive the 18% General Sales Tax (GST) on new aircraft acquisitions once PIA is privatised. This development is expected to make the airline more attractive to potential investors. In response, the Privatisation Division has been instructed to update its implementation roadmap to reflect these changes.
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To ensure a smooth privatisation process, Prime Minister Sharif has directed key ministries, including Aviation (now merged with Defence), Finance, Power, Industries, and Commerce, to set up dedicated legal teams. These teams will address any potential litigation issues and ensure the programme is executed without any major disruptions.
Currently, PIA’s liabilities amount to Rs45 billion, which includes Rs26 billion in unpaid taxes to the Federal Board of Revenue (FBR), Rs10 billion owed to the Civil Aviation Authority (CAA), and pension liabilities. The government is working on a strategy to manage these financial obligations to make the airline more appealing to prospective buyers.
The National Assembly Standing Committee on Privatisation has clarified that non-core assets, such as land or buildings not directly related to PIA’s aviation operations, will not be included in the bidding process. A separate policy for these assets is being developed. A consultant has been hired to provide several privatisation options to the Cabinet Committee on Privatisation (CCoP) for consideration.
PIA’s previous privatisation attempt in October last year failed when the sole bidder, the Blue World City consortium, offered only Rs10 billion for a 60% stake, significantly lower than the Privatisation Commission’s minimum expectation of Rs85.03 billion. This failure led to a reassessment of the privatisation strategy, with the government now pushing forward with a more aggressive timeline.
