ISLAMABAD: The privatization of Pakistan International Airlines (PIA) has encountered a significant setback as unresolved tax liabilities and labor issues have deterred pre-bidding parties from moving forward.
During a Senate Standing Committee on Privatization session, officials from the Privatization Commission confirmed that six prospective bidders for PIA expressed reluctance over employee retention and outstanding tax obligations.
Chairman Tallal Badar raised concerns about the delay in the bidding process, initially set for October 1, which has now been postponed to October 31. Badar emphasized that these delays are casting a negative light on the process and could further hinder the planned privatization of the country’s electricity distribution companies (Discos). He warned that failure to adhere to deadlines would send a damaging message to the international market.
Usman Bajwa, Secretary of the Privatization Commission, noted that pre-bidding parties are seeking clarification on several issues, including employee pensions, service conditions, and protection from existing legal liabilities. Additionally, the bidders have requested an 18-aircraft warranty and safeguards against ongoing litigation involving the airline. Bajwa reassured the committee that the commission is working diligently to address these concerns and ensure that the October 31 deadline is met.
Tax liabilities, amounting to over Rs 200 billion, have emerged as a critical issue for the potential investors. They are apprehensive about inheriting PIA’s long-standing debts, which, along with concerns about pension obligations, pose significant hurdles in finalizing the deal. Bajwa emphasized that while progress has been made on several fronts, critical concerns related to these liabilities remain unresolved.
Senator Mohsin Aziz urged the government to swiftly resolve the tax and labor issues to ensure a smooth privatization process. He also criticized the Privatization Commission for its slow pace, pointing out that only a few banks have been successfully privatized over the last decade. He called for a streamlined approach, proposing that a single ministry should handle all employee and asset-related matters to avoid further complications post-privatization.
Badar echoed these concerns, emphasizing that the government must act decisively to resolve legacy issues such as tax obligations. He warned that the ongoing delays could jeopardize both the PIA and Disco privatizations, potentially undermining the government’s broader privatization agenda. With the October 31 deadline looming, the pressure is on the Privatization Commission to find solutions and restore investor confidence before the window of opportunity closes.