Govt sets August 2024 deadline for PIA privatisation

July 03, 2024 (MLN): The Privatization Commission (PC) expects to conclude the privatization process of Pakistan International Airlines (PIA) by August 2024, it said in a statement.

For the divestment of PIA, financial adviser (EY Consulting LLC, Dubai) was appointed in November 2023.

After sell-side due diligence, Federal Cabinet in February 2024 approved legal segregation plan and transaction structure for PIA.

In compliance to the Federal Cabinet decisions after completion of necessary actions, PC on April 02 and 15, 2024 publicized advertisement for invitation of Expression of Interests (EOI) for acquisition of 51-100% of equity of PIACL along with management control.

Resultantly, PC in June 2024, pre-qualified six parties as pre-qualified bidders for participation in the PIA privatisation process.

Buy-side due diligence is underway and bidding for PIA is targeted during August, 2024, the commission said in a statement.

Privatisation Programme of Pakistan

The government is finalizing a phased five-year Privatisation Programme (2024-29) including profit-making state-owned enterprises (SOEs) with the intention to reduce government presence in commercial space.

The Commission has selected 10 SOEs for privatisation within a year, including PIA and HBFCL.

The Cabinet Committee on Privatisation (CCoP) in its meeting held on May 10,2024 approved in principle 24 entities for privatisation, while 41 entities have been referred to the Cabinet Committee on State-Owned Enterprises (CCoSoEs) for their categorization as per SOE Act/Policy.

Those not falling in the category of Strategic/Essential SOEs will become part of the privatisation programme as well.

The 10 SOEs targeted to be privatised within a year include PIACL, RHC, FWBL, HBFC, ZTBL, PECO, SEL, IESCO, FESCO, and GEPCO, out of the total of 24 to be privatised.

The commission expects the transaction of House Building Finance Company Limited (HBFCL) to be completed by the end of July 2024.

The privatisation of Roosevett Hotel, New York City, USA is also at an advanced stage and an international financial adviser has been appointed in February 2024.

The FA has conducted sell-side due diligence and has submitted a draft transaction structure.

After approval of the transaction structure by the Federal Cabinet, marketing of the transaction will be initiated.

The privatisation of First Women Bank Limited (FWBL) is currently being pursued under Government-to-Government mode pursuant to interest of government of UAE and subsequent decision of the Federal Cabinet dated February 06, 2024.

The transaction will be carried forward as per provisions of the G2G Act.

Meanwhile, Power Generation Companies (GENCOs) will be initiated in a phased manner.

Power Division will consider carving out efficient power plants (Cornbined Cycle) from GENCOs and privatising only efficient power plants (Cornbined Cycle) of the four GENCOs, instead of privatizing whole GENCOs as a whole.

The obsolete technology-based plants may be disposed-off by the Power Division itself.

Once Power Division resolves the associated issues and convey readiness for privatisation, tlre process of their privatisation will be initiated by Privatisation Commission.

Furthermore, for the privatisation, long-term concession, and retention of Power Distribution Companies (DISCOs), three options are being deliberated.

Out of 11 DISCOS, 06 have been recommended under privatisation mode, 03 under long-term concession while 02 are to be retained.

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