Business community backs PIA privatization as Pakistan targets power sector reforms

ISLAMABAD: Pakistan's business community has welcomed the successful first financial closing of the privatization of Pakistan International Airlines Corporation Limited (PIACL), describing it as an important milestone in the country's economic reform agenda and expressing support for the government's plans to privatize other state-owned enterprises, particularly electricity distribution companies.

Pakistan earlier this week announced the first closing of the divestment of PIACL through privatization and the transfer of management control to a consortium led by Arif Habib Corporation after all conditions under the Share Purchase and Subscription Agreement (SPSA) were fulfilled.

The national carrier, which had accumulated more than $2.8 billion in losses over the years, was privatized in December 2025 after the consortium agreed to acquire a 75% stake for Rs135 billion ($482 million) through a competitive bidding process that valued the airline at Rs180 billion ($643 million).

According to the Privatization Commission, the government completed a series of conditions precedent under the SPSA since January, including regulatory approvals, lessor and commercial consents, aviation policy reforms, corporate approvals, restructuring of taxation relating to legacy liabilities, aircraft financing arrangements, governance changes and tax-related matters.

Under the first financial closing, the consortium paid Rs10 billion ($36 million) to the government as sale proceeds and injected Rs80 billion ($288 million) into PIACL as fresh equity. The investment will strengthen the airline's financial position, support fleet expansion and modernization, expand its route network and improve operational performance and customer service.

“This transaction demonstrates Pakistan's ability to execute complex strategic transactions through a transparent, fair, competitive and professionally managed process,” Muhammad Ali, adviser to the prime minister on privatization, said in a statement.

“It reinforces the government's commitment to economic reform, fiscal responsibility and greater private-sector participation while strengthening confidence among domestic and international investors.”

The bidding process held on Dec. 23, 2025, resulted in a total investment commitment of Rs180 billion ($643 million), according to the Privatization Commission. Of that amount, Rs55 billion ($197 million) will be paid to the government for the acquisition of PIA, while Rs125 billion ($449 million) will be invested in the airline to support its long-term transformation and revival.

The second financial closing is scheduled within 12 months of the first closing, under which the consortium has committed to inject a further Rs45 billion ($161 million) into PIACL. The consortium has also exercised its call option under the SPSA to acquire the government's remaining 25 percent stake for an additional Rs45 billion ($161 million).

Prime Minister Shehbaz Sharif said the first financial closing marked “another important milestone in Pakistan's economic reform journey.”

“The successful First Financial Closing of the PIA privatization transaction, and the transfer of management control to the investor consortium, marks the beginning of a new chapter for our national carrier,” Sharif wrote on X.

“With a transformational investment to modernize and strengthen PIA, we are laying the foundation for its revival while reinforcing investor confidence in Pakistan.”

The International Monetary Fund (IMF) welcomed Pakistan's privatization efforts in January 2026, describing the sale of the country's national airline as a milestone that could help advance the divestment of loss-making state-owned enterprises.

Following the first financial closing, business leaders also praised the government's privatization efforts and called for reforms to continue.

“The successful privatization of PIA is a welcome and important step towards advancing Pakistan's structural reform agenda,” OICCI Secretary General M. Abdul Aleem told Pakistan TV Digital.

“Beyond securing a good value for the national carrier, the real opportunity lies in transforming PIA into an efficient, commercially driven international airline that leverages its valuable landing rights at major international airports to expand direct connectivity with key markets in Europe and North America, attract more passengers and enhance Pakistan's global competitiveness.”

Aleem said the government should continue the privatization process in other sectors, particularly electricity distribution companies (DISCOs), where greater private-sector participation could improve efficiency and service delivery.

“The government's role should be to create a conducive business environment and step in only where the private sector is unwilling or unable to invest,” he said.

Federation of Pakistan Chambers of Commerce and Industry (FPCCI) President Atif Ikram Sheikh also welcomed the transfer of PIA to the private sector through what he described as a transparent privatization process, calling it a landmark step in the country's economic reform agenda.

Sheikh told Pakistan TV Digital that the business community fully supports the government's efforts to strengthen the national economy through structural reforms and expressed confidence that the successful privatization of the national carrier would encourage further progress in the government's wider reform program.

He added that greater private-sector participation would reduce the financial burden on the national exchequer while improving efficiency, governance and overall operational performance.

PM Sharif has previously described the privatization of state-owned enterprises as one of his administration's top priorities. The government's privatization drive forms part of broader economic reforms supported by the IMF under Pakistan's $7 billion loan program, with the Fund repeatedly urging Islamabad to reduce fiscal losses by privatizing or restructuring chronically loss-making state-owned enterprises.

Building on the momentum from the PIA transaction, officials said the Privatization Commission plans to divest electricity distribution companies in two phases. The first phase will include Islamabad Electric Supply Company, Gujranwala Electric Power Company and Faisalabad Electric Supply Company, followed by Hyderabad Electric Supply Company and Sukkur Electric Power Company in the second phase.

The prime minister has also directed the Privatization Commission to accelerate digitalization and strengthen its public relations and marketing functions to improve transparency, governance and engagement with investors.

The power sector has long weighed on Pakistan's public finances because of high losses, inefficiencies and mounting subsidies, making it a central focus of the government's reform agenda under the IMF program.

Before the PIA transaction, the UAE-based International Holding Company acquired a majority stake in First Women Bank Limited under a government-to-government privatization deal. The transaction was completed in October 2025 in the presence of Pakistani and UAE officials.