Two prospective PIA buyers bid above reference price of Rs100bn; auction enters second round
ISLAMABAD: A second round of auction being held for the privatisation of Pakistan International Airlines will be held at 5:40pm on Tuesday (today) after the conclusion of the first round, which saw two prospective buyers — Arif Habib and Lucky Cement — bid higher than the reference price of Rs100bn.
Submitted on Tuesday morning, they came from pre-qualified bidders Lucky Cement, private airline Airblue and investment firm Arif Habib.
Lucky Cement has put up a bid of Rs101.5 billion, Airblue Rs26.5bn, and the Arif Habib consortium bid Rs115bn.
At the outset of the ceremony, the Adviser to the prime minister on privatisation, Muhammad Ali, addressed the audience.
He hoped that PIA’s privatisation would open “paths for investment in the country”.
“I would also like to thank all bidders who are present today, and those who were part of the bidding process but did not reach the final round. We wouldn‘t have been here without them, and this process wouldn’t have been completed,” he said.
Representatives of the bidding groups walked in one by one to deposit sealed offers into a transparent box, briefly fumbling as they pushed envelopes through the slot in a public ceremony in Islamabad that was broadcast on state television.
The reference price for PIACL’s bidding will now be approved by the Privatisation Commission Board and the Cabinet Committee on Privatisation after bids have been received.
The bids will be opened in a ceremony starting at 4:30pm in the presence of the bidders. The bids and the reference prices will be announced, and the bidding will be concluded as per the agreed terms.
Adviser to the prime minister on privatisation, Muhammad Ali will also hold a press conference after the conclusion of the bidding process. The whole process will be telecast live and streamed across all TV channels as well as respective social media handles of the government, which will be hoping to avoid a repeat of the last time the airline went under the hammer.
Speaking to the media on Tuesday, Ali said, “God willing, we will get a good bid, there will be good investment and we will succeed.“
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 the country’s first major privatisation in nearly two decades.
Meanwhile, Prime Minister Shehbaz Sharif, while addressing a meeting of the federal cabinet, thanked government officials and the Privatisation Commission for their role in the national carrier’s privatisation.
He stressed that the process has been made “transparent“, stating that it will be the “largest transaction” ever in Pakistan’s history.
“Today, as the bidding starts [..] the bids will come in sealed envelopes, there will be transparent boxes, there will be a live telecast. When the price is determined, the envelopes will be opened. They will compete, and whoever has the highest bid will [succeed],“ he said.
“Only God knows how high the bid will go, but the process must come back to the cabinet,” he said.
Unsuccessful bidders to be excluded from PIA management
Earlier, Ali said the two unsuccessful bidders will be excluded from any future role in the airline’s management thanks to a unique stipulation.
In recent remarks, he explained that losing bidders will have no right to join the winning bidder, and only those groups who were not party to the auction would be able to join the new management.
This means that while only one of the three consortiums currently in the running for the flag carrier will become part of its administration upon acquisition of a majority stake, Fauji Fertiliser Company Ltd retains the option to join with them subsequently, if it wishes to.
The company was previously in the race for PIA but then decided to quit the bidding process.
Ahead of Tuesday’s bidding, reports surfaced of a behind-the-scenes deal involving at least two of the parties involved — the Arif Habib and Lucky Cement groups — that reportedly fell through.
In a tweet, journalist Kamran Khan alluded to a meeting where it was proposed to split the controlling stake among three of the four interested parties. However, Khan claimed, this arrangement fell through as one of the parties — i.e. the Muhammad Ali Tabba-led Lucky Cement group — did not agree to it.
Both Tabba and a high-ranking government official privy to developments confirmed this, but clarified that this was not a government-brokered meeting, but rather an informal interaction.
Talking to Dawn, Tabba expressed unwavering confidence in the privatisation process, and clarified that the proposal was floated to him after a meeting in Islamabad, which he did not pursue.
Additional input from Reuters
