PIA privatisation: Blue World City refuses to match PC’s ‘minimum expectation’ of Rs85.03bn, sticks to Rs10bn offer

Blue World City consortium refused to match the minimum expectation of the Privatisation Commission of Rs85.03 billion and stuck to its original offer of Rs10 billion for a 60% stake in Pakistan International Airlines (PIA), ending the bidding process of the national flag carrier’s privatisation.

Rules and regulations indicate that the ball is now in court of the Privatisation Commission to declare Blue World City as the highest ranked bidder or cancel the bidding process.

“The bid offer will be submitted to the relevant forums ie PC Board, Cabinet Committee on Privatisation and finally, the Cabinet,” said an official of the Privatisation Commission in response to a query from Business Recorder. “The cabinet is the final authority to accept or reject the bid.”

The real estate development company, which was the only entity to bid for the national flag carrier, submitted the bid of Rs10 billion after which it was given 30 minutes to meet the PC criteria.

However, after the interval, a representative of Blue World City stated that the valuation the company made put it in the range of its bid.

Earlier, the bidding process for the privatisation of PIA got under way at the Serena Hotel with the Privatisation Commission confirming to Business Recorder that the consortium of real estate group Blue World City submitted the lone bid.

The bids were to be submitted at 1:30pm. Other groups stayed away from depositing the ‘earnest money’, and hence, were not eligible to submit a bid.

The lone bid was unveiled at around 6:35pm, and Blue World City made an offer of Rs10 billion for the stake in PIA.

A total of six groups had earlier been shortlisted to bid for shares in PIA including Airblue Ltd., Arif Habib Corporation Ltd., Air Arabia’s Fly Jinnah, Y.B. Holdings Pvt., Pak Ethanol Pvt. and real estate consortium Blue World City.

However, Bloomberg on Tuesday reported that the government received interest from only one group out of a total of six for a stake in the national carrier as other consortiums stayed away from one of the country’s major privatisation attempts.

It was confirmed on Wednesday that Blue World City was the sole bidder for a stake in the country’s flag carrier.

Saad Nazir, Chairman of Blue World City, confirmed to Reuters in a text message that his company is the only one to enter the final bidding process, though he declined to disclose the earnest money it had submitted.

Market sources indicated that the earnest money amount was Rs500 million, and was refundable.

Pakistan aims to privatise flag carrier PIA in November: finance minister

Blue World City had a consortium that included Blue World Aviation and IRIS Communication Limited. The group is also looking into acquiring operations of the Islamabad International Airport which the government is looking to outsource.

Islamabad previously said it was putting on the block a stake of between 51% and 100% in the debt-ridden airline as part of reforms urged by the International Monetary Fund (IMF) with which it has an ongoing 37-month, $7-billion bailout.

However, after much delay, during a time when potential bidders raised several concerns over various features of the privatisation, the process took place place amid strict scrutiny.