PIA Sale Scheduled for July, Govt Assures IMF

Pakistan has committed to the International Monetary Fund that it will sell Pakistan International Airlines by July, while decisions about New York’s Roosevelt Hotel remain pending after the United States moved to end a $228 million lease agreement earlier than planned. During discussions with the IMF about Pakistan’s largely inactive privatization program, government officials outlined intentions to privatize between five and seven entities, reported Express Tribune. These include PIA, three financial institutions, and three power distribution companies. Zarai Taraqiati Bank Limited (ZTBL) stands among the financial institutions marked for privatization, with officials expressing optimism about completing its sale by November this year. Officials told the global lender that the Cabinet Committee on Privatization will decide whether to sell the high-value Roosevelt Hotel outright or arrange a joint lease agreement. The PIA-owned hotel sits in a location ranked among the top 1% of the world’s most valuable real estate and contains 1,025 rooms. In July 2023, Pakistan leased the hotel to the Immigrant Housing Business through the New York City Government for three years. However, officials informed the IMF that New York authorities have notified them of plans to terminate the agreement in July—a full year ahead of schedule. This early termination is projected to cause roughly $80 million in lost revenue. For the third year of the agreement, the city government had been paying $210 per room. The CCOP anticipated last November that President Donald Trump’s immigration policies might affect the $228 million three-year arrangement. Officials told the IMF they are now exploring other business possibilities for the property. Officials informed the IMF that the CCOP will soon determine the approach to privatizing the hotel, based on recommendations from a committee led by Ali Pervaiz Malik, who currently serves as federal minister for petroleum. This committee has advocated privatizing the Roosevelt Hotel through open bidding after Saudi Arabia showed no formal interest in acquiring the PIA-owned property. However, the CCOP has yet to consider the committee’s report for a decision. The Privatization Commission stated last year that under government-to-government arrangements, foreign governments must officially declare interest before the Inter-Governmental Commercial Transaction Act can be invoked. According to the committee’s proceedings, no foreign government had expressed formal interest in acquiring the hotel as of late December. The special committee has recommended to the CCOP that the hotel be sold through open and competitive bidding. Nevertheless, the committee also granted the Privatisation Commission latitude to determine whether to sell the hotel outright, develop it through a joint venture, or lease it for 99 years. Regarding PIA’s privatization, the Privatisation Ministry updated the IMF on its status, establishing July 2025 as the deadline to sell the loss-making airline. The report added that officials informed the IMF they are currently assessing market sentiment before issuing an Expression of Interest to attract investors by the end of this month. The government appears uncertain about the second attempt’s prospects, as it has resumed the process of gauging investor interest and determining whether there’s appetite for purchasing a financially troubled entity. Officials told the IMF that three parties might participate in the bidding, including two bidders who previously withdrew when the government refused to waive the 18% sales tax on aircraft leases and remove Rs. 45 billion in liabilities from PIA’s balance sheet before privatization. The IMF has now agreed to relax these two conditions, which, along with reopening European routes, are viewed as key incentives for a successful second round of bidding. Regarding financial institutions, the report revealed that the United Arab Emirates has expressed interest in purchasing the First Women Bank Limited as a full commercial bank, with the deal expected by the end of May. However, the UAE prefers a government-to-government transaction rather than participating in open bidding. The government is also in the process of hiring a financial advisor for ZTBL’s sale, with hopes of completing the transaction by November. Officials expect to sell the House Building Finance Company next month, establishing yet another deadline after several previous timelines have passed without results.