Fauji Fertiliser Company Ltd, earlier viewed as a leading contender for a 75% stake in Pakistan International Airlines, has formally withdrawn from the privatisation bidding and notified the Privatisation Commission, even as sealed bids are due on December 23.
The move came on Saturday, the last day for depositing earnest money. Three other prequalified bidders submitted the required amount and are set to file sealed bids, while Fauji Fertiliser did not, a senior Privatisation Commission official told.
Officials said the company’s decision to stay out of the bidding means it can later join any winning consortium, noting that if it had submitted a bid, rules would have prevented it from teaming up with the successful bidder afterwards.
Earlier, the Privatisation Commission Board had prequalified four bidders: Fauji Fertiliser Company Ltd; Airblue (Pvt) Ltd; a consortium led by Lucky Cement with Hub Power Holdings, Kohat Cement and Metro Ventures; and a consortium led by Arif Habib Corporation with Fatima Fertiliser, City Schools and Lake City Holdings. On November 7, AKD Group Holdings (Pvt) Ltd was added to the Arif Habib-led consortium.
Under the privatisation plan, bids will be invited for a 75% stake in PIA. The winning bidder must decide whether to buy the remaining 25% stake, for which the government has offered a 90-day option period.
The bidding process will begin with sealed bids. The Privatisation Commission Board will first approve the reserve price, followed by approval from the Cabinet Committee on Privatisation. Bids will then be opened publicly in the presence of the media. If bids exceed the reserve price, open bidding will follow. If bids fall below it, the highest bidder will be given the first right to match the price.
Of the amount paid for the 75% stake, 92.5% will be invested in PIA, while 7.5% will go to the government. The remaining 25% stake retained by the government is considered valuable, and bidders will have the option to acquire it later or leave it with the state.
Officials said the structure was designed to accommodate bidders interested in either 75% or full ownership. Those who do not participate in the bidding cannot later join the winning consortium, a restriction that no longer applies to Fauji Fertiliser now that it has formally withdrawn.
Under the payment terms, the winning bidder must pay two-thirds of the bid amount within 90 days, while the remaining one-third can be paid within 12 months.
The government has assured 12 months of job security for PIA employees. Pension liabilities, medical benefits and other post-retirement perks will be handled by the holding company, while current salaries and benefits will be paid by the new owners.
PIA currently have rights to 78 destinations and holds about 170 landing slots worldwide. Officials said the airline urgently needs fresh investment and professional management to turn around its operations.