Fauji Fertilizer abandons PIA bid as three teams remain in the race

• The competition is scheduled for December 23, officials say.
• Four bidders were selected by the Council of the Privatization Commission.
• AKD Group joined the Arif Habib-led consortium on November 7.

ISLAMABAD: Fauji Fertilizer Company Ltd, which was earlier considered a leading bidder for 75% stake in Pakistan International Airlines, has formally withdrawn from the privatization tender and notified the Privatization Commission, even as sealed bids are due on December 23. The News was mentioned.

The move was made on Saturday, the last day for depositing profits. Three other default bidders submitted the required amount and are set to submit sealed bids, while Fauji Fertilizer has not, a senior Privatization Commission official said The News.

Officials said the company’s decision to stay out of the competition means it can later join any winning consortium, noting that if it had submitted a bid, rules would have prevented it from working with the successful bidder thereafter.

Earlier, the Privatization Commission Board had shortlisted four bidders: Fauji Fertilizer Company Ltd. Airblue (Pvt) Ltd; a joint venture led by Lucky Cement with Hub Power Holdings, Kohat Cement and Metro Ventures. and a consortium led by Arif Habib Corporation with Fatima Fertiliser, City Schools and Lake City Holdings. On November 7, AKD Group Holdings (Pvt) Ltd was added to the consortium led by Arif Habib.

Under the privatization plan, bids will be made for a 75% stake in PIA. The winning bidder must decide whether to buy the remaining 25% stake, for which the government has offered a 90-day option period.

The bidding process will begin with sealed bids. The board of the Privatization Commission will first approve the reserve price, followed by approval by the Ministerial Committee on Privatization. Bids will then be publicly opened in the presence of the media. If bids exceed the reserve price, an open auction will follow. If bids fall below that, the highest bidder will have the right to match the price.

Of the amount paid for the 75% stake, 92.5% will be invested in PIA, while 7.5% will go to the public. The remaining 25% stake held by the government is considered valuable and bidders will have the option of acquiring it later or leaving it with the state.

Officials said the structure was designed to accommodate bidders interested in either 75 percent or full ownership. Those who do not participate in the tender cannot later join the winning consortium, a restriction that no longer applies to Fauji Fertilizer now that it has officially withdrawn.

According to the payment terms, the winning bidder must pay two-thirds of the bid amount within 90 days, while the remaining one-third can be paid within 12 months.

The government has ensured 12 months job security for PIA employees. Pension obligations, medical benefits and other post-retirement benefits will be handled by the holding company, while ongoing salaries and benefits will be paid by the new owners.

PIA currently has rights to 78 destinations and holds about 170 landing slots worldwide. Officials said the airline urgently needed new investment and professional management to turn around its operations.