Pakistan’s PIA Privatisation Draws Single Bid Far Below Government’s Reserve Price

 ISLAMABAD — The final bidding round for the long-awaited privatisation of Pakistan International Airlines (PIA) has attracted just one offer — a 10 billion Pakistani rupee ($36 million) bid from real estate developer Blue World City, the Ministry of Privatisation confirmed on Thursday.

Despite pre-qualifying six entities for the process in June, only Blue World City submitted a formal bid for a 60% stake in the loss-making national carrier. The offer, however, fell significantly short of the government's reserve price of 85 billion rupees.

In a statement, the Privatisation Commission said it has asked the sole bidder to revise its offer to match the government’s minimum price. Blue World City Chairman Saad Nazir, however, stood firm, stating during the bidding ceremony: “We wish the government all the best if they don’t want to accept our bid.”

Speaking later to Reuters, Nazir said raising the offer was not commercially viable. “If this doesn’t go through and they don’t accept our offer, we will start our own airline,” he added, questioning the financial model used to determine the government's valuation, which he claimed did not account for "significant leakages" within PIA.

Mohammed Sohail, CEO of Topline Securities, noted that the wide gap between the submitted offer and the reserve price presents the government with a stark choice: accept the lone bid or revisit its privatisation strategy for the national airline.

Meanwhile, representatives from three pre-qualified groups that chose not to participate in the final bidding cited concerns over long-term policy continuity and the government's commitment to uphold commercial agreements. One executive, speaking on condition of anonymity, pointed to political instability as a major deterrent, given the reliance of Prime Minister Shehbaz Sharif’s government on a fragile coalition of diverse political factions.

The federal government has yet to respond to these concerns, but the privatisation of PIA has long been considered politically sensitive, primarily due to fears of mass layoffs and public backlash.

Adding to investor uncertainty are recent developments in the power sector. Earlier this month, the government moved to terminate power purchase agreements with five private producers and has begun renegotiating other sovereign-guaranteed contracts. These actions have reignited worries about the sanctity of commercial agreements in Pakistan.

“Renegotiating decade-old contracts with power producers sends troubling signals,” said Sakib Sherani, economist and CEO of Macro Economic Insights. “It raises the perceived risk of investing in Pakistan, even when sovereign guarantees are in place.”

In response to such criticism, Pakistan’s Power Division has insisted that all revisions to existing contracts will be undertaken with mutual consent and in line with the government's ongoing commitment to uphold its obligations to both local and foreign investors.