ISLAMABAD: In a significant development for Pakistan’s largest privatisation effort in over two decades, the Privatisation Commission has officially approved the inclusion of Fauji Fertiliser Company (FFC) in the consortium set to acquire a controlling 75% stake in Pakistan International Airlines (PIA). This endorsement broadens the consortium’s base as the group prepares to meet the crucial first payment deadline scheduled for late April, marking a pivotal step in the Rs135 billion (approximately $480 million) transaction.
The Privatisation Commission’s board, chaired by the Prime Minister’s Adviser on Privatisation Muhammad Ali, conducted a thorough review to ensure that FFC fulfills all necessary regulatory and eligibility criteria before granting approval. This procedural clearance is a vital milestone, as the matter now advances to the Cabinet Committee on Privatisation, which holds the authority for the final green light. The inclusion of FFC was widely expected within industry circles, given prior indications from the lead consortium member.
Back in December, the consortium led by Arif Habib Corporation outbid a rival group spearheaded by Lucky Cement to secure the winning bid of Rs135 billion. This bid represented the largest privatisation deal in Pakistan’s recent history. At that time, Arif Habib Corporation had hinted that Fauji Fertiliser Company might join the consortium at a subsequent stage, leveraging the transaction framework that allows the consortium to nominate up to two additional members. Arif Habib Corporation continues to hold the position of lead member and majority stakeholder within the expanded group.
Alongside FFC, the consortium now includes notable entities such as Fatima Fertiliser, AKD Group, City Schools, and Lake City Holdings. The collective strength of these diverse investors is expected to bring both financial muscle and strategic expertise to the revitalisation of PIA. The consortium faces a critical deadline in late April, when it must pay approximately two-thirds of the total bid amount—around Rs83.3 billion—as part of the deal’s first closing. At this juncture, the group will also need to declare its intentions regarding the purchase of the government’s remaining 25% stake, which is offered at a 12% premium.
This transaction has been carefully structured to channel Rs124.87 billion directly into PIA’s operations rather than the national treasury, aiming to stabilise the airline’s precarious financial position. Prior to the sale, PIA was incurring losses estimated at around Rs50 billion annually, a drain that the government has been eager to halt. The privatisation deal is a cornerstone of Pakistan’s broader economic reform agenda, which is backed by the International Monetary Fund (IMF) and seeks to improve fiscal discipline and operational efficiency within state-owned enterprises.
In addition to approving FFC’s participation, the Privatisation Commission’s board has also recommended revising the commission’s fee structure. This move is designed to enhance the commission’s financial sustainability and support ongoing institutional reforms, ensuring that the body tasked with overseeing privatisation processes remains robust and effective in the long term.
As the deal progresses toward its next phases, all eyes will be on the Cabinet Committee on Privatisation’s decision and the consortium’s ability to mobilise the substantial funds required. The successful completion of this transaction could mark a turning point for PIA and signal a renewed commitment to economic reforms in Pakistan.
