Pakistan Airforce to Purchase PIA Engineering Unit for Cheap

The federal government has decided to sell the Precision Engineering Complex (PEC), a business unit of Pakistan International Airlines (PIA), to the Pakistan Air Force (PAF) for Rs. 2.5 billion in cash. This sale price is one-fourth of the offer made by a sole bidder for 60 percent of PIA’s shares, reported ExpressTribune. The deal includes Rs 2.5 billion in cash payments over five years, and PAF assumes Rs. 3 billion in pension liabilities for 259 retired employees and Rs. 1.1 billion in liabilities for 251 active employees. PAF will also bear the financial responsibility for PEC’s continued operations. PEC makes high-precision aerospace and industrial parts and has been valued at Rs. 6.5 billion. This valuation includes Rs. 4 billion in pension liabilities for current and retired employees. A ministerial committee has approved the transfer to PAF while a formal summary for federal cabinet approval is being prepared. PEC’s separation from PIA and inclusion in the PIA holding company has been part of efforts to offload non-core assets. As of December last year, PEC’s assets were worth Rs. 1.2 billion with Rs. 2.9 billion liabilities and a net negative equity of Rs. 1.73 billion. This deal comes after the government’s failed attempt to privatize PIA in October, where most bidders withdrew due to financial concerns and the government’s refusal to meet their demands.