The government is set to auction a 75% stake in Pakistan International Airlines (PIA) with a commitment to reinvest most of the proceeds back into the national carrier struggling with financial troubles, reports said Friday.

 

According to reports, officials have briefed a Senate panel about the plan as Prime Minister's (PM) Adviser on Privatisation Muhammad Ali said 92.5% of the bidding proceeds would be reinvested in PIA to support its turnaround.

 

He added that the airline would still require an additional Rs80 billion in financing after privatisation to stabilise operations and fund growth.

 

Ali told the Senate Standing Committee on Privatisation, chaired by Senator Afnan Ullah Khan, that PIA currently operates 18 aircraft and needs fresh investment to induct new planes. He said the reference price for the bidding has not yet been finalised.

 

Only the airline’s core aviation business is being privatised. Assets such as the Roosevelt Hotel in New York will remain under government ownership and will be developed through a joint venture instead of privatisation.

 

Privatisation Commission Secretary Usman Bajwa informed the committee that the government could sell up to 100% of PIA shares depending on investor interest and final approvals.

 

He said major obstacles that undermined a previous privatisation attempt have been removed including Rs33 billion in liabilities that investors were earlier required to assume. Tax-related issues including those linked to sales tax have also been resolved.

 

Bajwa noted that the reopening of routes to Britain and Europe has strengthened PIA’s commercial outlook. Negotiations with investors over final commercial terms have entered the last stage and are expected to conclude soon.

 

Following privatisation the airline will immediately need about Rs80 billion in financing to sustain operations.