PIA for sale! Net worth set at Rs. 30 billion for potential buyers

Pakistan has taken a significant stride towards the privatization of Pakistan International Airlines (PIA) by endorsing specific eligibility standards for firms keen on acquiring a major share in the national carrier.

The sanctioned criteria mandate a minimum net worth threshold of Rs30 billion or approximately $100 million for prospective buyers.

This decision was reached by the Privatisation Commission’s board, presided over by Privatisation Minister Abdul Aleem Khan.

Not only did the board approve the prequalification criteria, but it also constituted a prequalification committee to supervise the selection process of suitable bidders.

The government has issued an invitation for bids for the sale of between 51% and 100% of the stakes in PIA. Interested investors have until May 3rd to submit their Statements of Qualification.

In a bid to attract potential investors, the Privatisation Commission has released an Expression of Interest alongside a draft Request for Statement of Qualification (RSOQ).

According to the newly endorsed financial standards, individual bidders must possess a minimum net worth of Rs30 billion or $100 million, based on their most recent financial statements.

In the case of a consortium of companies bidding collectively, their cumulative net worth should amount to at least Rs30 billion. The primary company leading the consortium must have a net worth of at least Rs8 billion or $25 million. The adequacy of this minimum net worth requirement has sparked debate among industry observers, with some arguing that the set threshold is relatively low, considering the substantial investment needed to acquire PIA and potentially expand its operations in the future.

Another crucial criterion set by the Privatisation Commission is that the bidding consortium must demonstrate a minimum aggregate annual revenue of Rs200 billion or approximately $700 million.

This criterion is intended to ensure that the bidders possess a robust financial background and the capacity to manage a significant and intricate operation such as PIA.

The decision to privatize PIA forms part of the government’s broader strategy to reform and fortify the national carrier, which has grappled with financial challenges and operational issues in the past.

The successful privatization and restructuring of PIA hold the potential to enhance the airline’s efficiency, service quality, and financial performance.

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