PIA goes under hammer on June 3
In accordance with the federal government’s desire to go forward with the privatization of the national flag carrier, Pakistan State Oil (PSO) has granted its approval for the divestiture of Pakistan International Airlines (PIA), opening the door for the bidding round on June 3, 2024.
For the gasoline that the PSO provided for PIA’s commercial operations, PIA owes it Rs. 27 billion. PSO has, in fact, given its approval in this case, sources told The Express Tribune, enabling the federal government to forward the PTI privatization process to the bidding stage.
Amid apprehensions from outside investors over political stability and ease of doing business in Pakistan, the government has established a deadline of June 3, 2024, for holding the bidding process for the airlines’ privatization.
Two main concerns were raised by investors thinking about doing business in Pakistan during a recent cabinet meeting. One was the issue of political stability, which was resolved with the elections and installation of a new elected administration.
Concerning the second issue, it was seen that the International Monetary Fund (IMF) program had continued, improving the financial and economic situation.
As a result, a cabinet committee was formed to discuss privatizing the PIA and outsourcing airport administration.
The convener of the committee was the minister of defense and aviation; other members were the secretary of the Privatization Commission (PC) and aviation as well as the ministries of privatization and foreign policy. The deputy chairman of the Planning Commission also served as a convener.
In the meanwhile, the federal cabinet waived the charge for the authorized capital in compliance with the Companies Act, 2017, according to the Aviation Division, after the approval of a new holding company on February 6 to implement the Scheme of Arrangement (SOA).
In order to carry out this decision, the Aviation Division sought advice on holding company establishment from the Securities and Exchange Commission of Pakistan (SECP). The SECP informed that cabinet approval would be needed for the holding company’s incorporation.
The Law Division finished reviewing the PC’s proposed articles of association (AOA) and memorandum of association (MCA) at the same time. On advice from the Finance Division, the holding company adopted the terms of the AoA and the MoA.
The federal government owns and controls PIA Holding business Limited (PIA HoldCo Ltd), a public limited business that serves as the holding company. Succession of particular assets, liabilities, and subsidiaries of PIA Corporation Ltd (PIACL) is the main activity of PIA HoldCo.
PIA HoldCo has been granted an amount of Rs53.5 billion, which would be split into 1,500,000 Class B shares and 5,349,250,000 Class A shares, each worth Rs10. There would be no charge for the permitted capital. The company’s paid-up capital would be limited at Rs 10,000.
The secretaries of the Aviation Division, Finance Division, and Privatization Division will be among the first subscribers of PIA HoldCo Ltd. Until regular directors are chosen, these first subscribers will also act as PIA HoldCo Ltd’s first directors. Succession of particular assets, liabilities, and subsidiaries of PIA Corporation Ltd (PIACL) is the main activity of PIA HoldCo.
PIA HoldCo has been granted an amount of Rs53.5 billion, which would be split into 1,500,000 Class B shares and 5,349,250,000 Class A shares, each worth Rs10. There would be no charge for the permitted capital. The company’s paid-up capital would be limited at Rs 10,000.
The secretaries of the Aviation Division, Finance Division, and Privatization Division will be among the first subscribers of PIA HoldCo Ltd. Until regular directors are chosen, these first subscribers will also act as PIA HoldCo Ltd’s first directors.
Until a formal CEO was selected, the Chief Executive Officer (CEO) of the PIACL would also function as the CEO of the PIA HoldCo. These specifics about the holding company’s incorporation and the fee waiver would be released in the official gazette.
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