The Pakistan Airports Authority (PAA) is currently evaluating a proposal to outsource the management of Islamabad Airport to a Turkish consortium known as TERG, comprising Terminal Yapi, ERG Insaat, and ERG UK. This initiative is part of Pakistan’s broader strategy to enhance operational efficiency and generate revenue through the privatization of key infrastructure.
During a recent bidding process, TERG emerged as the sole bidder, offering a concession fee of 47.25% of the project’s revenue. However, this offer falls short of the government’s minimum threshold of 56%. Consequently, the matter has been referred to the International Finance Corporation (IFC), a member of the World Bank Group, for further evaluation. The IFC’s assessment will inform the PAA’s final decision, which will subsequently require approval from the federal cabinet.
In parallel, Pakistan is seeking to privatize its national carrier, Pakistan International Airlines (PIA), by selling a 60% stake. This move aims to alleviate the airline’s substantial debt and is aligned with the conditions of a $7 billion International Monetary Fund (IMF) program. A previous attempt to privatize PIA in October 2024 was unsuccessful, as the sole bid received was significantly below the government’s minimum price.
Recent developments indicate that the IMF has agreed to certain concessions to facilitate PIA’s privatization. These include waiving the 18% sales tax on the lease of aircraft and allowing the government to assume more of PIA’s liabilities by parking them in a holding company. Such measures are expected to enhance PIA’s attractiveness to potential investors, potentially increasing its bidding value from Rs250 billion to Rs350 billion.
These privatization efforts are part of Pakistan’s commitment to economic reforms under the IMF program, aiming to improve fiscal stability and promote sustainable growth. The government’s strategy includes modernizing infrastructure, enhancing operational efficiency, and reducing the financial burden of state-owned enterprises. While challenges remain, such as meeting minimum bid thresholds and securing investor interest, these initiatives represent significant steps toward achieving economic resilience and development.
