The ping-pong match for the sale of our national airline lasted all of 90 minutes. The game began at 5.00 pm on 23 December.

It had been scheduled for 4.00 pm. The unexplained delay hardly mattered. Bidders who wanted their own airline would certainly wait another hour.

Unlike the first Privatisation ‘loot’ sale of 31 units, held in a meena bazaar atmosphere on the lawns of the Privatisation Commission (PC) in May 1991, the auction of PIA’s shares took place in a 5 star hotel, before television cameras and the press, to ensure ‘transparency and competitiveness’. On offer were 75% of PIA shares, with an option to buy the remaining 25%.

In an earlier attempt in 2024, the PC received only one offer - from the Blue World City consortium. Its bid of Rs10 bn. for a 60% stake in PIA was embarrassingly less than the PC’s valuation of Rs85 bn., and therefore rejected. PIA reappeared in the market this month.     

Undaunted by the PC’s preamble that ‘PIA has lost Rs800 bn. over the last 20 years’, three bidders – the Lucky Cement Consortium, Air Blue,  and the Arif Habib Consortium – prepared for the match. Fauji Fertilisers for tactical reasons withdrew, aiming to obtain PIA’s shares in another way.

The three sealed bids were extracted from a see-through box and opened with pedantic gravitas.

The first bid by Lucky Cement group (LC) was for Rs101.5 billion. In retrospect, it seemed suspiciously too close to the Government’s reserve price of Rs. 100 bn., announced after the bids had been opened.

The second bidder Air Blue (the only contender with airline experience) pitched its offer at Rs26.5 bn. Could that have been because Air Blue knew too little or too much about PIA?

The third bidder Arif Habib’s consortium (AH) topped Lucky Cement by offering Rs115 bn.

The PC officials went into a huddle for 30 minutes and returned at 5.40 pm to declare the auction open, starting from Rs 115 bn. Offers could be made in steps of Rs250 mn.

The ping-pong game between the two highest bidders began in earnest, with seven speedy volleys and matched returns: LC Rs115.5 bn./ AH 116 bn.; LC 116.25 bn./ AH 116.50 bn.; LC Rs 116.75 bn./ AH 117.50 bn., until the bidding stalled at LC Rs120.25 bn. / AH Rs 121 bn.

A recess of 30 mins was requested by LC at 5.55 pm, during which the Finance Minister appeared briefly, to congratulate the PC team for its efforts and to laud the inherent patriotism that all the bidders were Pakistanis.  

Bidding then resumed. Five more volleys, and the score crawled by stages from Rs.125 bn. to Rs 135 bn.. At that point, Lucky Cement conceded defeat.

What interested viewers was the behaviour of the representatives of the two teams. Lucky Cement members consulted each other and some distant principals over their mobiles. An imperturbable Arif Habib sat with all the confidence of someone who has deep pockets, and confident of a patron with even deeper ones.

The terms of the transaction allow the buyer to bid for the remaining 25% of PIA’s shares within 90 days. It can pay for the 75% of PIA’s shares in two tranches – two thirds up front and the remaining one third after a year.         

If the bidding process could be hailed as ‘transparent’, its aftermath is murky, spawning more questions than answers.

The morning after, Arif Habib announced that Fauji Fertilisers has joined its group, presumably to help AH exercise the option to buy the remaining 25% of PIA’s shares?

Will the unsuccessful Lucky Cement Group acquire some of Arif Habib’s 75% shares? It obviously has the resources. It was prepared to pay Rs134 bn. for those 75% shares.

What will the Government do with the Rs 135 bn. realised from the disinvestment? It has announced that it will retain only Rs10.12 bn. The remaining Rs124.88 bn. will be ‘reinvested’ in PIA.  How? As a loan or a subvention to reduce PIA’s liabilities?

It had been assumed that the government would use the privatisation proceeds to pay off the liabilities transferred by sleight of hand from PIACL to PIA Holding Company. At the time of PIA’s restructuring in 2024/5, the Government assumed direct responsibility for Rs.654 bn. These included Bank debts of Rs. 268 bn., Government debt of Rs.170 bn., Employees’ liabilities of Rs 44 bn., operating liabilities of Rs.188 bn., and dues of Rs 144 bn. owed to the Civil Aviation Authority (CAA) and Pakistan State Oil (PSO).

The privatisation of PIA should be a case study, and taught in business schools. Future students can then fathom at leisure the reality hidden behind the screen of televised obfuscation.

F. S. AIJAZUDDIN

[DAWN, 25 Dec. 2025]