The Government will conduct the final bidding for the privatization of PIA with the selected bidder

• Government wants to offload 51-100% stake in debt-ridden airline.
• Only Blue World City meets the deadline for submission of documents.
• There are concerns about the government’s ability to honor long-term agreements.

KARACHI: The current government will on Thursday conduct the bidding process for the privatization of Pakistan International Airlines (PIA) with a single candidate.

The development comes as Prime Minister Shehbaz Sharif’s government seeks to offload a 51-100 percent stake in debt-ridden airlines to raise capital and reform bleeding state-owned enterprises as envisioned in a $7 billion International Monetary Fund (IMF) program.

The privatization ministry said the process will begin at 1:30 pm and bids will be opened at 6:30 pm. in Islamabad.

The bidding process was earlier postponed by a month and postponed from October 1 to October 31 (today).

The government had pre-selected six groups in June, but only one — property developer Blue World City — met a deadline on Tuesday to submit final documents to join the process.

Officials from three teams that chose not to bid said so Reuters on condition of anonymity that there were concerns about the government’s ability to honor the agreements made for the flag carrier in the long term.

One official expressed concern about policy continuity when a new government came in. The government has been based on a coalition of disparate political parties.

The scrapping of PIA is a step that previous governments have shied away from as it was unpopular given the number of layoffs that would likely result from it.

Those concerns about policy continuity and contract compliance were the government’s termination of power purchase agreements with five private companies earlier this month, as well as the process of renegotiating other state-guaranteed pacts.

Changes to the country’s decades-old deals with private IPP projects, largely financed by foreign lenders, to address chronic power shortages, “increase the risk of investing as well as doing business in Pakistan, even in the presence of government contracts as well as guarantees,” said Sakib Sherani, an economist who heads the private firm Macro Economic Insights.

Other concerns raised by potential bidders were inconsistent government communication, unattractive terms and taxes in the sector, besides legacy issues and PIA’s reputation.