Pakistan to receive bids for PIA privatization in televised auction

Pakistan kicked off a televised auction for state carrier Pakistan International Airlines on Tuesday as the government attempts to push through a long-delayed reform demanded by the International Monetary Fund.

Bids for a majority stake in PIA are scheduled in two phases, with submissions due around 10:45 a.m. (0545 GMT) and a public bid-opening ceremony later in the day, officials said.

The auction is Pakistan's second attempt at selling the once storied flag carrier after televised bidding last year collapsed when a solitary offer fell far below the government's reference price, derailing what would have been Pakistan's first major privatisation in nearly two decades.

Three domestic bidders are expected to participate in Tuesday's auction after the military's Fauji Fertilizer withdrew from the process, Privatisation Minister Muhammad Ali told digital media outlet Nukta in an interview last week.

Under the transaction structure, the government is open to selling up to 100% of PIA, with any stake above 75% subject to a 15% premium, local media reported.

TRY, TRY AGAIN

Last year, the government set a minimum price of $305 million for a 60% stake, but received a single bid of $36 million from real estate developer Blue World City, which declined to raise its offer, citing concerns over PIA's finances and "significant leakages".

Officials from several pre-qualified groups told Reuters at the time they chose not to bid due to concerns over policy continuity, unattractive terms and doubts about the government's ability to honour long-term commitments, particularly after Islamabad moved to renegotiate sovereign-guaranteed power contracts.

PIA's prospects have since improved. Islamabad has assumed most of the airline's legacy debt, the carrier has posted its first pre-tax profit in two decades, and Britain and the European Union have lifted a five-year ban that had cut PIA off from its most lucrative routes.

The reopening of those routes could materially lift revenues and support a higher valuation than in last year's failed auction, analysts and government officials have said.

The airline's sale forms part of a broader privatisation push under Pakistan's IMF bailout, which also includes plans to offload stakes in state-owned banks, power distribution companies and other loss-making enterprises as the government seeks to curb fiscal drain and restore investor confidence.

-Ariba Shahid in Karachi/Reuters