Latest news with #PrivatisationCommission
Business Recorder
3 days ago
- Business
- Business Recorder
Consensus on Discos' sell-off: Working group formed for FA-stakeholder coordination
ISLAMABAD: The government has constituted a working group intended to coordinate with relevant stakeholders and the Financial Advisors to achieve consensus on the privatisation process of power Distribution Companies (Discos), well informed sources told Business Recorder. In the first phase, the government is fast-tracking efforts to privatise three Discos— Islamabad Electric Supply Company (IESCO), Gujranwala Electric Power Company (GEPCO), and Faisalabad Electric Supply Company (FESCO) — with the goal of completing the process by the end of calendar year 2025. Financial Advisors, Alvarez & Marsal Middle East, has given the sectoral due diligence report. The Working Group comprised of Abdul Basit Abbasi, Consultant, Privatisation Commission – (Convener), Sajid Akram, Director General, NEPRA, Umer Haroon, Independent System and Market Operator (ISMO), Umair, Senior Manager, CPPA-G, Salman Rehman, Director, NEPRA, Abdul Moiz Khawaja, Additional Joint Director SECP, Consultant, Power Division, nominee, Power Planning and Monitoring Company, nominee, CPPA-G, nominee, NEPRA DISCO's team and nominees, Financial Advisor. Discos' sell off: 'Turkish model' under consideration The Working Group will hold its first meeting on July 26, 2025 in the Ministry of Privatisation. According to the Terms of Reference (ToRs), Working Group in furtherance of section 5(f), 5(g), and 5(t) of the Privatisation Commission Ordinance, 2000, the Chairman of the Privatisation Commission, is pleased to constitute a Working Group (WG) to address and resolve key issues identified in the Financial Advisor's Sector Due Diligence (DD) report concerning government-owned Power Distribution Companies whereby the regulatory framework in which privatization will proceed will be studied to form the basis of policy, regulatory and/or administrative decisions required to be taken by the Federal Government before privatization. The Working Group will coordinate with relevant stakeholders and the Financial Advisor to achieve consensus and provide recommendations on the following matters:(i) Bifurcation of Retail and Wire Business - recommendations with respect to bifurcation of retail and wire business and ancillary regulatory matters, such as licensing, dispatch and settlement processes, optimum tariff and subsidy regimes etc; (b) examination of legal and technical issues concerning housing societies and industrial zones, and their corresponding impact on the valuation and operations of DISCOs; (c) NEPRA's deliberation to unbundle Distribution and Supply businesses; and (d) any other relevant and related matter. Uniform Tariff and Industrial Cross-Subsidy Framework: Evaluation of the impact of the uniform tariff and existing cross-subsidies on DISCO valuation and recommendations for way forward. Review of the Multi-Year Tariff (MYT) Framework will include (a) assessment of whether the current MYT and associated indexation mechanisms require revision, based on Financial Adviser's feedback; and (b) MYT revision window at the time of the transaction. Supplier of Last Resort (SoLR) Licencing: (a) analysis of the merits and demerits of issuing competitive supplier licenses to the SOLR from the perspective of potential investors; and (b) CTBCM status and future evolvement plans, possible future business combinations and changes to DISCOs business perimeter over time (Distribution/SOLR/CS). Review of transition from current wholesale market to retail market trading: total quantum of power to be allocated to the wholesale market over the next five years and a clear roadmap for transition, review the details w.r.t. annual allocation and mechanism of award, including criteria, bidding processes (if any), and regulatory approvals. Mechanism to ensure investment and efficiency improvement post privatisation: (a) determine commitments to be required from prospective investors - particularly investment in infrastructure and efficiency enhancement; to align with and support the Government's privatization objectives and proposed transition in power market structures ; and (b) propose a mechanism to ensure that post-privatization, the required investments, efficiency gains, and service delivery improvements are effectively achieved. This should include considerations for enforceability, regulatory oversight, investor confidence, and balanced risk allocation. Copyright Business Recorder, 2025
Express Tribune
3 days ago
- Business
- Express Tribune
PC, PIA keep mum over airline's losses
PIA's bidding is expected to take place in the last quarter (October-December) of the current calendar year, said Muhammad Ali, Adviser to the Prime Minister on Privatisation. photo: file As the government gears up to sell the loss-making Pakistan International Airlines (PIA), the Privatisation Commission (PC) and the airline's management on Monday ducked questions from a parliamentary panel about false claims of making profit last year. A member of the National Assembly Standing Committee on Privatisation read out extracts from a finance ministry's report released last week, which showed that PIA incurred a net loss of Rs4.6 billion, contrary to the claims that it earned a profit of Rs26 billion. "It is very important to keep the record straight and figures should not mislead," remarked MNA Sehar Kamran of the PPP. However, neither Privatisation Secretary Usman Bajwa nor acting PIA CEO Air Vice Marshal Amir Hayat responded to the MNA's questions. In April this year, Prime Minister Shehbaz Sharif praised PIA for showing profit after consistently remaining in losses. However, the finance ministry's report showed the true picture. The ministry stated that PIA incurred a net loss of Rs4.6 billion and one-off "accounting profit" of Rs26 billion due to treating past losses as future assets "should not be misinterpreted as a sign of operational profitability". The biannual report on federal state-owned enterprises (SOEs) also highlighted the inefficiencies of PIA, though it had been freed from legacy debt and liabilities. "Despite the overhaul, PIACL Core still reported a pre-tax loss of Rs4.6 billion for the full year and Rs2.3 billion over six months," said the Ministry of Finance. Responding to another question, the PIA CEO said that the airline's accounts till June 2025 would be finalised by the end of July. The secretary, however, responded to other questions. Bajwa said that according to investors' feedback during the last privatisation bid, PIA had 20-25% surplus employees and the average age of aircraft was 18.5 years. "They think there is 20% fat in PIA" but if the number of aircraft was increased to 38, then there would not be much issue of over-employment, he said, adding that PIA had 6,700 employees compared to 11,000 a few years ago. The acting CEO said that the overstaffing issue was largely addressed and the employee-to-per aircraft ratio decreased from 550 to 200. Committee Chairman Farooq Sattar recommended that the government should try to negotiate a minimum three-year retention period for the existing employees. The fleet age has risen to 18 and a half years and the new investor would have to double the fleet within five years, said the secretary. The CEO said that the airline is currently flying 19 aircraft, adding that engines of eight Airbus 320 had been replaced, which should help in getting a better price. He said that PIA's key performance indicators have improved in the past one year. Four parties have pre-qualified for bidding. These include a consortium comprising Lucky Cement, Hub Power Holdings, Kohat Cement and Metro Ventures. The second consortium comprises Arif Habib Corporation, Fatima Fertiliser, City Schools and Lake City Holdings. The third bidder is Fauji Fertiliser Company, owned by the Fauji Foundation. The fourth bidder is Airblue. The government wants to sell majority shares in PIA along with management control. During the last attempt, it had set the minimum price at Rs85.03 billion with a negative balance sheet of Rs45 billion. Now, the government has taken out more debt from the balance sheet, which should positively impact the minimum price. The Privatisation Commission had invited Expressions of Interest (EOIs) for divestment of 51-100% share capital of PIA Corporation Limited (PIACL) together with management control. The pre-qualified parties are "the best of the best" and have sufficient funds for investment in PIA, said Usman Bajwa. He said that the commission had also approached Mian Mohammad Mansha, Pakistan's richest person, to bid for PIA. The secretary said that the potential buyers would begin due diligence from Tuesday (today) and the commission would try they complete the process in two to three months. The government aims to conclude the transaction in the last quarter of 2025.
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Business Standard
09-07-2025
- Business
- Business Standard
Pak govt stepping up efforts to sell cash-strapped PIA by 2025-end: Report
Pakistan's government is firming up efforts to sell Pakistan International Airlines by the end of 2025, following a botched bid to sell the loss-making national flag-carrier last year, according to a media report on Wednesday. The Privatisation Commission board on Tuesday declared four local parties, including three associated with the cement business, eligible for bidding for the acquisition of the airline, The Express Tribune newspaper reported. In its previous attempt, the government had set the minimum price at ₹8,503 crore with a ₹4,500 crore negative balance sheet; however, it only managed to secure an offer of ₹1,000 billion. The Privatisation Commission board, which met under the chairmanship of Adviser to the Prime Minister on Privatisation Muhammad Ali, approved the pre-qualification of four interested parties for the divestment of Pakistan International Airlines Corporation Limited (PIACL), according to a press statement. The board reviewed recommendations of the pre-qualification committee based on the evaluation of Statements of Qualification (SOQs) submitted by five prospective investors. Of these, one could not qualify for bidding. The commission said that the pre-qualified parties would now proceed to the buy-side due diligence phase a critical step in the transparent and competitive privatisation process. PIA's bidding is expected to take place in the last quarter (October-December) of the current calendar year, Muhammad Ali was quoted as saying by the newspaper. The government wants to sell the majority shares in PIA along with management control. It has offloaded more debt from the balance sheet, which should positively impact the minimum price. Meanwhile, the ban on the airline's operations to the EU has been lifted. The PIA has been in financial crisis for many years now. The issues came to the fore in 2023 when 7,000 employees of PIA did not receive their salaries for November 2023. Before this, the European Union banned PIA in 2020 over safety concerns.
New Indian Express
09-07-2025
- Business
- New Indian Express
Pakistan government stepping up efforts to sell cash-strapped PIA: Report
ISLAMABAD: Pakistan's government is firming up efforts to sell Pakistan International Airlines by the end of 2025, following a botched bid to sell the loss-making national flag-carrier last year, according to a media report on Wednesday. The Privatisation Commission board on Tuesday declared four local parties, including three associated with the cement business, eligible for bidding for the acquisition of the airline, The Express Tribune newspaper reported. In its previous attempt, the government had set the minimum price at Rs 85.03 billion with a Rs 45 billion negative balance sheet; however, it only managed to secure an offer of Rs 10 billion. The Privatisation Commission board, which met under the chairmanship of Adviser to the Prime Minister on Privatisation Muhammad Ali, approved the pre-qualification of four interested parties for the divestment of Pakistan International Airlines Corporation Limited (PIACL), according to a press statement. The board reviewed recommendations of the pre-qualification committee based on the evaluation of Statements of Qualification (SOQs) submitted by five prospective investors. Of these, one could not qualify for bidding. The commission said that the pre-qualified parties would now proceed to the buy-side due diligence phase - a critical step in the transparent and competitive privatisation process.
Express Tribune
08-07-2025
- Business
- Express Tribune
Cement makers in race to buy PIA
PIA's bidding is expected to take place in the last quarter (October-December) of the current calendar year, said Muhammad Ali, Adviser to the Prime Minister on Privatisation. photo: file Listen to article The Privatisation Commission board on Tuesday declared four local parties, including three associated with cement business, eligible for bidding for the acquisition of Pakistan International Airlines (PIA), inching a step closer to the sale of the loss-making entity. In a related development, the Cabinet Committee on Privatisation (CCOP) approved the transaction structure for the disposal of Roosevelt Hotel, New York, which is owned by PIA. The committee picked the option of running the hotel as a joint venture, which had been suggested by the financial adviser a year ago but was ignored by the government. Deputy Prime Minister Ishaq Dar chaired the CCOP meeting. The Privatisation Commission board met under the chairmanship of Adviser to the Prime Minister on Privatisation Muhammad Ali. It approved the pre-qualification of four interested parties for the divestment of Pakistan International Airlines Corporation Limited (PIACL), according to a press statement. The board reviewed recommendations of the pre-qualification committee based on the evaluation of Statements of Qualification (SOQs) submitted by five prospective investors, in line with technical, financial and documentary requirements, defined in the Request for Statement of Qualification (RSOQ). The board declared a consortium comprising Lucky Cement, Hub Power Holdings, Kohat Cement and Metro Ventures fit for bidding for PIA. The second consortium comprised Arif Habib Corporation, Fatima Fertiliser Company, City Schools (Private) Limited and Lake City Holdings (Private) Limited. The board also declared Fauji Fertiliser Company fit for bidding for PIA, accepting the entity as a private limited company. It is owned by the Fauji Foundation. Airblue (Private) Limited was the only entity that had been declared fit for bidding and was running an airline business. The Privatisation Commission said that the pre-qualified parties would now proceed to the buy-side due diligence phase – a critical step in the transparent and competitive privatisation process. A consortium of Augment Securities & Investments, Serene Air, Bahria Foundation, Mega C&S Holding and Equitas Capital LLC could not qualify for bidding. The government wants to sell majority shares in PIA along with management control. During the last attempt, the government had set the minimum price at Rs85.03 billion with a Rs45 billion negative balance sheet. Now, the government has taken out more debt from the balance sheet, which should positively impact the minimum price. PIA's bidding is expected to take place in the last quarter (October-December) of the current calendar year, said Muhammad Ali, Adviser to the Prime Minister on Privatisation. The Privatisation Commission had invited Expressions of Interest (EOIs) for divestment of 51-100% share capital of PIACL together with management control. It is the second attempt to privatise the airline after the first bid failed last year. The commission said that the CCOP on Tuesday approved the transaction structure for Roosevelt Hotel, New York, as proposed by the Privatisation Commission board. Out of the three options evaluated by the financial adviser – outright sale, joint venture with multiple options and long-term lease – the joint venture model with multiple options has been approved by the CCOP, according to the announcement. This option is aimed at maximising long-term value for the country, while ensuring flexibility, multiple exit opportunities and minimising future fiscal exposure, it added. These decisions reflect the government's strong commitment to advancing its economic reform and privatisation agenda in a transparent, market-driven and investor-friendly manner, said the commission. Pakistan hired Jones Lang LaSalle Americas as the financial adviser with a fee of Rs2.2 billion. According to its report on the transaction structure, Pakistan will not need to pay any additional money for a joint venture, as its contribution will come in the form of the hotel's land value. "Based on pre-marketing, due diligence and analysis of the options, the joint venture structure nets the highest value for the government of Pakistan," the adviser stated in its report. In the joint venture scenario, the government will contribute the entire land value to a joint venture partner. The land value will be calculated based on its full potential, including the 32-storey building. A contribution agreement will be signed immediately, with the joint venture agreement to follow in 2027. The development partner will make two initial deposits. "This option has the highest risk with the highest net proceeds to Pakistan," the adviser remarked in the report submitted last year.
