Potential Buyers Interested but Cautious Due to EU PIA Ban

The minister and federal secretaries briefed the media in Islamabad, focusing on updates regarding ongoing privatization initiatives. They emphasized that the sale of the Roosevelt Hotel in Manhattan could generate increased foreign exchange earnings through a newly proposed mixed-use transaction structure advised by US consultants. Additionally, concerns were voiced by pre-qualified bidders for Pakistan International Airlines (PIA) regarding the European Union’s ban on Pakistani airlines, which could influence bidding for the national carrier currently undergoing privatization.

Certainly! Here is a more detailed summary of the news briefing regarding the privatization updates in Islamabad:

Privatization Minister Abdul Aleem Khan, along with federal secretaries Jawad Paul and Usman Bajwa from the Privatization Division and Privatization Commission respectively, held a news briefing to provide updates on significant developments in the privatization efforts of Pakistan.

1. Roosevelt Hotel Sale:
   The focus was on the potential sale of the Roosevelt Hotel, a prestigious property located in Manhattan, New York. The government has engaged Jones Lang LaSalle Incorporated (JLL), a global real estate services firm based in Chicago, to advise on the privatization structure. JLL submitted a comprehensive due diligence report proposing three options for the transaction. One notable recommendation is to increase the floor area ratio (FAR) of the hotel, potentially doubling it from 1:15 to 1:30. This adjustment could significantly enhance the retail sellable area of the property, thereby increasing its market value by billions of dollars. Minister Aleem Khan emphasized his personal commitment to ensuring that the transaction achieves the highest possible value for Pakistan.
2. PIA Privatization and EU Ban Concerns:
   The briefing also addressed the privatization process of Pakistan International Airlines (PIA). Six pre-qualified bidders, including Air Blue, Lucky Group, Arif Habib Group, Blue World, Pak Ethanol, and FlyJinnah, are currently conducting due diligence on PIA’s data. However, concerns have been raised by these bidders regarding the European Union Aviation Safety Agency’s (EUASA) ban on Pakistani airlines, including PIA. This ban remains a significant hurdle as it could potentially affect the valuation and attractiveness of PIA to prospective buyers. Minister Aleem Khan expressed confidence that these concerns would be addressed in due course through comprehensive due diligence provided by the Civil Aviation Authority (CAA).
3. Privatization Process and Timeline:
   Usman Bajwa, federal secretary of the Privatization Commission, outlined the next steps in the privatization process. The JLL’s report on the Roosevelt Hotel and the concerns raised by PIA bidders will be presented to the Cabinet Committee on Privatization (CCoP) for a decision. The commission aims to invite expressions of interest (EOIs) for the Roosevelt Hotel by the first week of August. Regarding PIA, the timeline for bidding will be set after bidders complete their due diligence within the next week. Bajwa emphasized the government’s commitment to transparency and maximizing returns from the privatization process.
4. Government’s Privatization Strategy:
   Minister Aleem Khan reaffirmed the government’s commitment to its privatization agenda, which includes 24 entities slated for privatization over a five-year period. He lamented past setbacks caused by legal challenges and mismanagement, stressing the need for transparency and efficiency in the current privatization efforts. The minister also criticized former Chief Justice Iftikhar Muhammad Chaudhry for allegedly obstructing privatization efforts in the past, leading to substantial financial losses for the country.

Overall, the briefing underscored the government’s proactive approach to privatization, aiming to attract substantial foreign exchange earnings and reduce financial burdens through strategic asset sales.

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