Pakistan finalizes PIA privatization deal with Arif Habib consortium

Pakistan on Thursday finalized an agreement with the Arif Habib Consortium for the privatization of Pakistan International Airlines (PIA), officials told a parliamentary committee, marking what the government called its first successful privatization in two decades.

Secretary of the Privatization Commission Usman Bajwa informed the National Assembly’s Standing Committee on Privatization, chaired by Farooq Sattar, that the agreement with the successful bidder was signed earlier in the day.

He said the Arif Habib Consortium would now share its detailed business plan with the government and Parliament.

“We have handed over our plan to the new consortium,” Bajwa said, adding that the new owners are currently finalizing their business strategy and will brief the committee once it is completed.

However, the process drew objections from committee members, particularly MNA Noman Islam Sheikh, who questioned the transparency of the deal and the eligibility of the Arif Habib Group.

Sheikh said Parliament had not been informed before the signing of the agreement and raised concerns over whether a long-standing legal dispute involving Ayesha Steel Mills, linked to the Arif Habib Group, had been resolved prior to the privatization.

Responding to the concerns, Bajwa said the Arif Habib Group fully met all eligibility and scrutiny requirements. He said the group was cleared by the transaction’s financial advisers and that no competing bidder raised objections against it.

Bajwa added that the Supreme Court had not blacklisted the company and that the Securities and Exchange Commission of Pakistan had also cleared it after providing requested details.

The agreement

Under the agreement, the Arif Habib Group will acquire a 75% stake in PIA against an investment of PKR 135 billion. Bajwa said the group will only receive shares once it invests PKR 125 billion into the airline. Of this, PKR 80 billion will be injected as immediate investment within months.

The government of Pakistan will retain a 25% shareholding, valued at PKR 55 billion, and will monitor the investment. Two government representatives will sit on PIA’s eight-member board of directors, Bajwa said.

He emphasized that the consortium will not be allowed to withdraw PKR 125 billion from the airline and will only be permitted to recover funds through dividends. “The Arif Habib Group cannot take this amount out of PIA,” Bajwa said.

According to the privatization plan, the new owners have committed to doubling PIA’s aircraft fleet within five years and spending PKR 90 billion over the next two years to restore grounded aircraft. Bajwa said negotiations are also underway with Boeing to revive the airline’s Manchester route.

Farooq Sattar said the government had taken major steps to make the deal viable, including abolishing 18% general sales tax on aircraft purchases and assuming the airline’s entire debt burden. However, he cautioned against ignoring “bitter realities” and called for strong post-privatization oversight.

“We kept praying that the four remaining companies would stay in the process and not walk away,” Sattar said. He also referred to the Supreme Court’s 2006 decision that halted the privatization of Pakistan Steel Mills, saying its consequences were now evident.

Sattar stressed that PIA’s new management would remain answerable to Parliament even after privatization and urged the Privatization Commission to provide a detailed briefing to the committee. He also called for continuous monitoring to ensure compliance with government-imposed conditions.

Bajwa said that after privatization, all operational matters of the airline have been transferred to the Civil Aviation Authority. He described the PIA deal as the first successful privatization in 20 years, noting that previous efforts amounted to partial measures rather than full privatization.

The committee is expected to summon the new owners for a briefing once their business plan is finalized.