ISLAMABAD, : Adviser to Prime Minister on Aviation Air Marshal (Retd) Farhat Hussain Khan on Tuesday informed the Senate that the privatization of Pakistan International Airlines (PIA) was being carried out under the government’s policy to privatize loss-making entities.
Responding to a question during the Question Hour, he said the process of privatization of PIA is being completed transparently through open tender. The Adviser said initially, PIA will be privatized as a flight entity and the decision on its other properties will be made later by the Privatization Commission.
Regarding outsourcing of airports in the country, the Advisor mentioned that a Transaction Advisory Services Agreement (TASA) had been signed between the Pakistan Civil Aviation Authority and the International Finance Corporation (IFC), a subsidiary of the World Bank Group. This agreement, approved by the then Federal Cabinet in line with the Public Private Partnership Authority (P3A) Act and its relevant regulations, aims to outsource the operations of three international airports in Islamabad, Karachi and Lahore, he told.
The Advisor highlighted that the IFC would act as a transactional advisor for the outsourcing of airports. Islamabad International Airport has been selected as the first airport to be outsourced. The outsourcing period for Islamabad International Airport is set at 15 years, while the time frames for the remaining two airports will be determined by the
Federal Government based on a detailed study prepared by IFC, he added.
The Advisor said, the successful bidder for Islamabad International Airport will be disclosed after the bidding process is completed and the award of concession for outsourcing is expected to be completed before June 2024.
The Advisor clarified that only the operation and management of specific airport components would be outsourced, while critical services such as the Air Traffic Control Tower, Rescue and fire Fighting Services and Air Navigation services would remain under the control of the Pakistan Civil Aviation Authority.
He said the financial aspects of the outsourcing involve a fixed initial amount to be paid by the successful bidder and a percentage of revenue earned from the airport.
He said a one-time initial payment of US $100 million is required from the successful bidder. The financial details for airports in Karachi and Lahore will be finalized based on the analysis prepared by IFC.
In response to another question, the Advisor informed the Senate that PIA earned operational profit in Jan-June 2023. However, due to high financing costs and exchange losses, it incurred a net loss of Rs 61.6 billion as of June 30, 2023. He said that PIA has accumulated liabilities of Rs. 809 billion as of the same date.
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