PIA to Be Handed Over to New Owners by Month-End as Privatisation Process Nears Completion

ISLAMABAD: Pakistan International Airlines (PIA) is expected to be formally transferred to its new owners before the end of June, marking the completion of a long-awaited privatisation process that was delayed due to international regulatory requirements.

Prime Minister’s Adviser on Privatisation Muhammad Ali confirmed that all domestic and international approvals necessary for the transaction have now been secured. According to him, the transfer process involved obtaining approvals related to PIA’s operating rights in multiple countries and completing legal amendments required for the airline’s transition into a public limited company.

Although PIA remains under public-sector management until the final handover, Muhammad Ali said the new owners have already been involved in key operational and financial decisions under the terms of the sale agreement.

To facilitate the privatisation, the government secured approval from the International Monetary Fund (IMF) for a 15-year tax exemption on aircraft purchases, leases, equipment, and accessories. The exemption has also been incorporated into the Finance Bill 2026-27. However, Ali acknowledged that similar concessions are not currently available to other airlines, as the IMF's approval was specifically granted for PIA’s privatisation deal.

The preferential treatment has sparked concerns among lawmakers and industry stakeholders, who argue that it creates an uneven competitive environment for other airlines operating in Pakistan. Government officials have indicated they may seek IMF approval in the future to extend similar benefits to other operators.

Looking ahead, the government plans to accelerate its broader privatisation agenda. Islamabad International Airport is scheduled for privatisation during fiscal year 2026-27, with the Asian Development Bank (ADB) expected to be appointed as the transaction adviser after final approval from the Cabinet Committee on Privatisation.

The government will also begin the process of appointing financial advisers for the outsourcing of Karachi and Lahore international airports. Officials estimate that each airport could attract more than $500 million in fresh investment once private-sector participation is introduced.

In the power sector, five electricity distribution companies (Discos) have been targeted for sale or concession arrangements during FY27. The planned transactions include the sale of Faisalabad, Gujranwala, and Islamabad Discos later this year, while Hyderabad and Sukkur Discos are expected to be offered under long-term concession agreements.

Other entities expected to be privatised before June 2027 include Zarai Taraqiati Bank Limited (ZTBL) and the House Building Finance Corporation (HBFC).

PIA’s privatisation deal was finalized in December last year when a consortium led by Arif Habib secured a 75 percent stake in the national carrier through a bid worth Rs135 billion. A significant portion of the investment is intended for the airline’s modernization and expansion. Fauji Fertiliser Company, initially a competing bidder, later joined the consortium by acquiring an additional 25 percent stake.

Under the final ownership structure, Fatima Fertiliser holds the largest share at 34.1 percent, closely followed by Fauji Fertiliser with 33.9 percent. Lake City owns 16 percent, while City Schools and AKD Group jointly control the remaining 16 percent. With the completion of the handover, the consortium will assume full control of Pakistan’s national flag carrier.