- Lawmakers are skeptical about privatization plans and implementation delays.
- Roosevelt Hotel revenue expected despite joint venture issues.
- HBFC privatization almost complete after resolving key issues.
ISLAMABAD: The National Assembly Standing Committee on Privatization was informed on Thursday that the privatization process of Pakistan International Airlines (PIA) has resumed with recommendations for the sale of Roosevelt Hotel in New York now finalized.
In addition, , News According to reports, the privatization of the House Building Finance Corporation is nearing completion.
The committee, chaired by MP Farooq Sattar, was briefed by Privatization Commission Secretary Usman Bajwa. He revealed that PIA’s previous privatization efforts were stalled due to two unmet demands from investors.
Prospective buyers had sought GST relief for new aircraft to be able to compete globally and resolution of negative equity. However, these demands could not be met due to the conditions of the International Monetary Fund (IMF).
“Following negotiations with the IMF, these conditions have now been lifted. Additionally, the European ban on PIA has been lifted, paving the way for further privatization efforts,” Bajwa said.
He added that the government has approved the issuance of an Expression of Interest (EOI) and applications will be invited by the end of this month.
Regarding the Roosevelt Hotel, the committee was informed that a subcommittee has prepared new recommendations for its privatization. The next steps will be taken after the approval of the Cabinet Committee on Privatization (CCoP).
He added that revenue from privatizing the hotel is expected to be lower than a joint venture but could still generate significant revenue. “The final decision will be made by the government,” he said.
The secretary noted that a joint venture approach would delay the privatization process, while a direct sale could speed up the procedures.
On the House Building Finance Corporation, Bajwa said the process had reached its final stage. “A company interested in privatization has accepted the final conditions and a call for tenders will take place soon,” he assured the committee.
Agreement on key terms has been reached with the interested party. The next step is to seek approval from the Privatization Board and the Cabinet Committee on Privatization,” the secretary said.
Once approved, the government will ask the buyer to determine the price of the HBFC. The Secretary also noted that with a reduction in interest rates, there is potential to increase the availability of housing finance in the future.
However, lawmakers expressed doubts over the government’s commitment to privatization, highlighting problems with the privatization process of PIA and the House Building Finance Corporation (HBFC).
“Why is there only one bidder left in privatization deals? asked Khawaja Shiraz Mahmood, highlighting lingering concerns after the PIA privatization debacle. “After the humiliation of privatization of PIA, there is only one bidder left for HBFC,” he added.
The Secretary of the Privatization Commission explained that although the strict conditions of the HBFC privatization process led to only one bidder remaining, “two bidders remained until the end, but one “failed to meet the conditions set by the State Bank,” he said.
Mahmood questioned whether the government was really serious about privatization or whether it was just showing superficial efforts. He also expressed concerns about the privatization process, suggesting flaws that are hampering progress.
Sahar Kamran, another member of the committee, questioned the costs involved in the privatization of PIA, demanding accountability for the expenditure. “Who is responsible for the expenses incurred in the privatization of PIA? she asked, emphasizing the need to address the issue of accountability.
Sattar, addressing the committee, remarked: “We will take time to find the right solution; only then can the right price be set. He also suggested that the performance of PIA’s financial advisor, Ernst & Young, be reviewed.
The commission is awaiting further details on the expenditure of PIA’s privatization, with the Privatization Commission secretary assuring that full information will be provided later.
“Why didn’t other parties come forward as candidates? “” Sattar questioned, highlighting the main problem. Mahmood expressed his displeasure, asking: “Why did the Privatization Commission fail to convince the other parties?
The secretary of the Privatization Commission explained that all interested parties received a comprehensive briefing, with discussions on 11 key points at the final meeting before the offer. However, only two points remained unresolved, leading to complications.
One bidder requested a management review instead of participating in the tender process, another demanded the dismissal of all employees and a third requested GST relief on new aircraft to improve international competitiveness. Additionally, a bidder proposed to adjust PIA’s liabilities of Rs191 billion against assets of Rs141 billion.
“The main issue was the negative capital adjustment of Rs 45 billion,” the secretary explained, adding that the government rejected the relief due to the conditions of the IMF program.
Following negotiations, the IMF allowed two key conditions to be removed and Europe lifted its ban.
“The government has approved the issuance of a new Expression of Interest (EOI) and work on the privatization process is progressing rapidly,” the Secretary of State confirmed, adding that the government was continuing negotiations with investors.