Govt Paid Billions to Financial Advisor Who Failed to Sell PIA

The National Assembly’s Standing Committee on Privatization was informed on Tuesday that the privatization of Pakistan International Airlines (PIA) remains incomplete despite payments exceeding $4.3 million (Rs. 1.2 billion) to the Financial Advisor. Secretary Privatization Commission Usman Bajwa briefed the committee that so far Rs. 1.2 billion—63 percent of the financial advisory fee—has been paid, with the total due amount standing at $6.9 million. He said that the Financial Advisor will receive payments for the second phase of privatization only after the sale is completed. The committee was informed that the previous bid for PIA was not acceptable. Discussions also covered PIA’s assets, with PIA Holding possessing 26 properties and PIA-ACL owning five. The Roosevelt Hotel in New York and the Skype Hotel in Paris, both owned by PIA Holding, were briefly discussed. The committee was informed that the Roosevelt Hotel’s contract is set to expire in May, after which it will be vacated following a three-month notice. Separately, the committee opposed the closure of Utility Stores. Members argued that the abrupt withdrawal of government subsidies in August 2024 pushed the institution into financial distress even though the entity previously generated Rs. 1.5 billion in annual profits and contributed Rs. 25 billion in taxes. The government had allocated Rs. 60 billion in subsidies for Utility Stores in the current budget. Officials pointed out that the country’s 400,000+ retailers collectively pay Rs. 114 billion in taxes, whereas Utility Stores, despite making up just one percent of the retail sector, contribute 20 percent more in taxes. The committee discussed the possibility of converting the institution from a subsidy-dependent model to a commercial one.