ISLAMABAD: Fauji Fertilizer Company Ltd, once seen as a strong contender to buy a 75 percent stake in Pakistan International Airlines, has formally opted out of the bidding process and informed the Privatization Commission, even as bidding is set for Dec. 23, officials said.
The decision came as Saturday marked the final day to deposit earnest money. Three other prequalified bidders deposited the required amount and are ready to submit sealed bids, while Fauji Fertilizer did not, a senior Privatization Commission official told The News. Despite sitting out the bidding, Fauji Fertilizer will be free to join any winning consortium later, officials said, noting that had the company submitted a bid, rules would have barred it from teaming up with a successful bidder afterward. Earlier, the Privatization Commission Board had prequalified four bidders: Fauji Fertilizer Company Ltd; Airblue (Pvt) Ltd; a consortium led by Lucky Cement with Hub Power Holdings, Kohat Cement and Metro Ventures; and a consortium led by Arif Habib Corporation with Fatima Fertilizer, City Schools and Lake City Holdings. On Nov. 7, AKD Group Holdings (Pvt) Ltd was added to the Arif Habib-led consortium.
Under the privatization plan, bids will be invited for a 75 percent stake in PIA. The winning bidder must decide whether to buy the remaining 25 per cent stake, for which the government has offered a 90-day option period.
The bidding process will begin with sealed bids. The Privatization Commission Board will first approve the reserve price, followed by approval from the Cabinet Committee on Privatization. Bids will then be opened publicly in the presence of the media. If bids exceed the reserve price, open bidding will follow. If bids fall below it, the highest bidder will be given the first right to match the price.
Of the amount paid for the 75 percent stake, 92.5 percent will be invested into PIA, while 7.5 percent will go to the government. The remaining 25 percent stake retained by the government is considered valuable, and bidders will have the option to acquire it later or leave it with the state.
Officials said the structure was designed to accommodate bidders interested in either 75 percent or full ownership. Those who do not participate in the bidding cannot later join the winning consortium, a restriction that no longer applies to Fauji Fertilizer now that it has formally withdrawn. Under the payment terms, the winning bidder must pay two-thirds of the bid amount within 90 days, while the remaining one-third can be paid within 12 months. The government has assured 12 months of job security for PIA employees. Pension liabilities, medical benefits and other post-retirement perks will be handled by the holding company, while current salaries and benefits will be paid by the new owners. PIA currently have rights to 78 destinations and holds about 170 landing slots worldwide. Officials said the airline urgently needs fresh investment and professional management to turn around its operations.
