Good News Govt Confirms: No Guarantees for PIA Buyers as Privatization Speeds Up

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No Guarantees for PIA Buyers

The Government of Pakistan has officially announced that No Guarantees for PIA Buyers will be provided to investors interested in purchasing Pakistan International Airlines (PIA). Despite investor concerns, the Privatisation Commission emphasizes that the PIA sale remains a top national priority for 2025 and is expected to be finalized within the year.Chairman Muhammad Ali confirmed that the International Monetary Fund (IMF) has already approved the removal of sales tax (GST) from the PIA transaction to make the deal more appealing. However, he firmly stated that investor-specific guarantees will not be issued, noting that Pakistan’s governance challenges and shifting political landscape make such commitments unsustainable.

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Progress So Far

The PIA privatization process is now entering its final stages. The government aims to complete the sale by December 2025, with formal bidding set to begin in mid-November. Four major investor consortia have already been pre-qualified for due diligence. These include prominent business groups and aviation companies with experience in large-scale investments.One of the most significant obstacles to previous attempts at privatization was the airline’s enormous Rs 45 billion in liabilities, including outstanding dues owed to the Federal Board of Revenue (FBR). With IMF approval, the government has now agreed to absorb these liabilities, clearing the way for a cleaner, more attractive transaction for new investors.Additionally, the IMF-approved GST waiver on aircraft purchases is expected to help modernize PIA’s aging fleet once privatization is complete.

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Requirements for the New Buyer

Under the latest business plan, any investor acquiring PIA will be required to:

Invest at least Rs 70 billion over five years
Take control of 51% to 100% shares of the airline
Undergo a detailed due diligence process covering financial, operational, and fleet assessments
Provide job security guarantees for a large portion of PIA’s staff for 3–4 years

These requirements aim to ensure that the privatization process leads to sustainable, long-term improvement rather than short-term profit-taking.

Government’s Wider Privatization Plan

The PIA sale is part of a much broader government strategy to reduce losses from state-owned enterprises (SOEs) and improve economic stability. Several other major companies are also being prepared for privatization, including:

IESCO (Islamabad Electric Supply Company)
FESCO (Faisalabad Electric Supply Company)
GEPCO (Gujranwala Electric Power Company)

A Turkish-style concession model is also being studied, which would allow private companies to operate and manage utilities for long-term periods while the government retains ownership.The government is also working to outsource management of Karachi and Lahore airports, each requiring nearly $1 billion in investment for modernization. Additionally, major reforms are expected in Pakistan’s gas sector, where restructuring and possible privatization of the Sui gas companies are under consideration.

Key Details at a Glance

Category	Details
Privatisation Completion Target	December 2025
Bidding Phase Begins	Mid-November 2025
Pre-Qualified Bidders	4 major consortia, including aviation and industrial groups
Government Stake for Sale	51% – 100%
Liabilities Settled by Government	Rs 45 billion
GST on Aircraft Purchases	Removed
Investor’s Required Investment	Rs 70 billion over 5 years
Employee Job Security	3–4 years (proposed)

FAQs

1. Why is the government refusing to offer guarantees to PIA buyers?

The government believes that providing guarantees undermines transparency and increases financial risk. Changing administrations also make long-term guarantees unreliable. Therefore, investors must take on full commercial responsibility.

2. How were PIA’s liabilities resolved before privatization?

The government agreed—under IMF guidance—to absorb roughly Rs 45 billion worth of liabilities, including overdue taxes. This move was essential to make PIA more attractive to buyers.

3. What financial commitments must the new PIA owner make?

The winning bidder must commit to investing Rs 70 billion over five years, take majority ownership, and ensure several years of job security for PIA employees.

Final Word

The accelerated privatization of PIA marks one of the most significant economic reforms in Pakistan’s recent history. While the government’s refusal to offer guarantees may challenge some investors, the removal of liabilities and tax burdens has made the opportunity far more appealing. If executed successfully, this privatization could reshape Pakistan’s aviation industry and set a precedent for restructuring other struggling state-owned enterprises.