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The National Assembly’s Standing Committee on Privatization was informed that the financial advisor hired for the privatization of the national airline, Pakistan International Airlines (PIA), had already been paid Rs 1.2 billion, yet the privatization process remained incomplete.
The meeting, held in Islamabad under the chairmanship of Dr. Farooq Sattar, featured a briefing by Privatization Commission Secretary Usman Bajwa.
During the session, the secretary provided details regarding the financial aspects of the privatization process, revealing that the financial advisor was to receive a total payment of $ 6.9 million (Rs 1.9 billion). Out of this amount, Rs 1.2 billion had already been disbursed, constituting 63% of the total payment.
Bajwa clarified that no additional payments would be made to the financial advisor for the second phase of the privatization process. Instead, the remaining amount would only be released upon the successful completion of the privatization. He further explained that the previous bid submitted for PIA’s privatization had been deemed unacceptable.
Providing further insights, the secretary informed the committee members that PIA Holdings owned 26 properties, while PIACL possessed five. Among these, a decision regarding a valuable plot located in Islamabad’s Blue Area was still pending, with its estimated worth ranging between Rs 10 billion and Rs 12 billion.
Additionally, he highlighted that the Skaipe Hotel in Paris and the Roosevelt Hotel were both commercial properties under the ownership of PIA Holdings. The existing lease agreement for the Roosevelt Hotel was set to expire in May, after which a three-month notice period would be issued before the property was cleared for further action.
It was also noted that on November 13, 2024, the Privatization Board has rejected the bids received for PIA’s privatization. Subsequently, new proposals were put forward, with a decision made to present them before the Cabinet Committee and the Federal Cabinet for consideration.
The rejection of the bids occurred during a meeting of the Privatization Board, which was chaired by the Federal Minister for Privatization, Aleem Khan.
Meanwhile, the Committee was briefed by the Secretary of the Privatization Commission regarding the expenditures incurred on the privatization of Pakistan International Airlines Corporation Limited (PIACL). He informed the Committee that during the fiscal year 2023-2024, an amount of USD 4.3 million had been paid to the financial advisor, Ernst & Young, out of a total fee of USD 6.8 million—constituting 63% of the payment. The remaining amount will be disbursed following the second attempt at privatization.
Additionally, the Secretary apprised the Committee that the Privatization Commission had conducted a valuation of properties to be retained by PIACL, and the updated valuations had been duly reflected in the financial statements for the period ending April 30, 2024. In response, the Committee directed the Commission to provide details of the properties that had been handed over to holding companies.
The discussion then shifted to the Privatization Commission (Amendment) Bill 2024 (Government Bill). The Committee examined the bill in detail and raised an objection to Clause 4, Section 7(4). Members asserted that the Ministry of Law must clarify whether there exists any precedent where the Prime Minister, rather than the Cabinet, has been granted decision-making authority over the privatization process. The Committee reiterated its directive for the Ministry of Law to present relevant details in written form at the next meeting. Consequently, the Committee deferred further deliberation on the Privatization Commission (Amendment) Bill 2024 until the subsequent session.
The Secretary of the Privatization Commission further briefed the Committee on the inclusion of the Pakistan Engineering Company (PECO), Lahore, in the privatization agenda in August 2024. He noted that PECO currently has no active production line and employs only 32 staff members. Additionally, the National Investment Trust (NIT) holds a 23% share in the company, which was acquired from the open market. However, the Ministry of Industries expressed concerns regarding the transparency of these transactions within the stock exchange.
Representatives from the private sector also addressed the Committee, highlighting various challenges. They emphasized that PECO was once a source of national pride, attracting industrialists from China and Japan. In the 1960s, the company was even involved in the manufacturing of aircraft parts. Following its transition to private sector management, the company’s financial losses significantly declined—from Rs 2 billion to 700 million.
In light of these discussions, the Committee recommended that the Secretary of the Privatization Commission, in consultation with the Secretary of Industries and the Secretary of Law, submit a detailed report on the matter.
