
An image, showing a PIA passenger plane, taken through a glass panel, at Islamabad International Airport, Pakistan October 3, 2023. — Reuters
In a fresh bid to privatise Pakistan International Airlines (PIA), the government is set to issue an Expression of Interest (EoI) this month, putting the national flag carrier on sale with a clean sheet of liabilities.
To appeal to serious bidders and ensure a smooth selloff, the government is protecting the buyers against an 18% goods and services tax (GST) on aircraft purchasing after obtaining approval from the International Monetary Fund (IMF).
It's worth mentioning that the waived 18% GST will reportedly encompass the entire aviation sector of the country after complete privatisation of the profitless PIA, a move said to facilitate private operators in expanding their businesses and services.
The imposition of the 18% GST was one of the two significant pitfalls believed to be unfavourable for previous buyers who retreated with their bids and did not even partake in the recent bidding process, according to The News.
In favour of PIA's private takeover, the same bidders have expressed interest in the next bidding round to acquire Pakistan's loss-making flag carrier, as the exoneration from the GST and the clearing of Rs45 billion negative equity on the airliner’s balance sheet were their major demands.
Resuming after a botched finalisation of a deal, PIA's private sell-off will now undergo the removal of Rs45bn negative equity by the government, out of which Rs26 billion accounts for FBR taxes, Rs10bn for Civil Aviation charges and the remaining for pension liabilities.