ISLAMABAD: Pakistan’s Cabinet Committee on Privatization (CCOP) this week rejected a $36 million bid from a real estate development company to acquire 60 percent stakes in the government-owned Pakistan International Airlines (PIA), state-run media reported. 
Pakistan’s process to privatize the PIA encountered difficulties last month when its final bidding round for the national flag carrier attracted just one bid of Rs10 billion ($36 million) for a 60 percent stake in the airline. The bid was made by real estate development company Blue World City. 
The cash-strapped country is looking to offload a 51-100 percent stake in the debt-ridden PIA to raise funds and reform state-owned enterprises as envisaged under a $7 billion International Monetary Fund (IMF) program. 
A meeting of the CCOP chaired by Deputy Prime Minister Ishaq Dar on Friday discussed Blue World City’s bid and the Privatization Commission’s (PC) suggestion to reject it. 
“The Cabinet Committee on Privatization (CCOP) rejected the bid of Rs10 billion submitted by the Blue World City for the divestment of 60 percent shares of the Pakistan International Airlines, accepting the recommendations of the Privatization Commission Board,” the state-run Associated Press of Pakistan (APP) reported on Friday.
The CCOP reiterated the government’s resolve to divest the national flag carrier through privatization or government-to-government (G2G) mode. 
“The body noted with satisfaction the assessment of the aviation division on healthy PIACL’s finances,” APP said. 
Pakistan’s government disclosed last year that it had signed a contract with the New York City administration to resume business activities at the Roosevelt Hotel, which is owned by the PIA. 
The hotel was closed by Pakistani authorities in October 2020 during the coronavirus pandemic, as the country’s economy weakened and the aviation sector faced significant losses. However, the facility accumulated liabilities of around $25 million in taxes and other overheads.
“The committee also constituted a committee under the convenorship of the minister of state for finance to evaluate possible transaction options for the privatization of Roosevelt Hotel and modes to be adopted in the light of available legal provisions,” APP said. 
Pakistan’s Khyber Pakhtunkhwa (KP) province and a business group in Canada led by a Pakistani expat have both expressed their interest in acquiring the national flag carrier. 
The government had pre-qualified six groups for PIA’s privatization process in June, but only real-estate development company Blue World City participated in the bidding process last month, placing a bid that was below the government-set minimum price of Rs85 billion ($304 million). 
The disposal of PIA is a step former governments have steered away from, as it has been highly unpopular given the number of layoffs that would likely result from it.
Other concerns raised by potential bidders for the PIA stake included inconsistent government communication, unattractive terms and taxes on the sector, and the flag carrier’s legacy issues and reputation.