PIA privatisation reflects govt's seriousness to shrink commercial footprint: experts

• Expert blames PIA's decline on executives' mismanagement.
• Warns asset sales can't substitute for long-term strategy.
• Govt's should regulate markets not operate commercial enterprises.

KARACHI: Experts welcomed the long-delayed privatisation of Pakistan International Airlines (PIA) saying that the move sends a powerful signal to investors that the government is serious about shrinking its commercial footprint and tackling inefficiencies that have drained public resources for years, The News reported on Wednesday.

"The government should make a sustained effort to get out of the business of running businesses," said Uzair Younus, a Washington-based economic analyst in his comments to the publication.

He described the PIA transaction as a turning point, adding that other sectors, particularly energy, should follow. "Privatisation and deregulation of the energy sector should be priority number one for 2026," he said.

A consortium led by Arif Habib Corporation emerged as the top bidder on Tuesday for a 75% stake in the national carrier, offering Rs135 billion in what authorities hailed as a landmark moment.

The auction marked Pakistan's first major privatisation in nearly two decades and comes amid pressure to reform loss-making state firms under a $7 billion International Monetary Fund (IMF) programme.

Arif Habib raised its bid from Rs115 billion to Rs135 billion after the Lucky Cement Limited–led consortium increased its earlier bid of Rs101.5 billion to Rs134 billion in the second round of the open-bidding.

Arif Habib and Lucky Cement consortia advanced to the open auction stage after placing offers above the reference price of Rs100 billion, while private airliner Airblue exited the bidding after submitting an offer of Rs26.5 billion.

The government officials have said that of the amount paid for the 75% stake, 92.5% of the proceeds will be invested directly into PIA, while the remaining 7.5% — amounting to Rs10.12 billion — will be transferred to the federal government. The government-retained 25% stake has been termed a valuable asset, and successful bidders will have the option to acquire it at a later stage or allow it to remain with the state, according to the privatisation framework.

Losses from state-owned enterprises have long constrained Pakistan’s fiscal space, limiting spending on health, education and social protection. Mohammed Sohail, chief executive of brokerage firm Topline Securities, said the PIA sale marked Pakistan’s first major privatisation in 19 years and reflected renewed investor confidence.

"The bidding price exceeded expectations," Sohail said, pointing to the competitive process as evidence that investors see value in the airline's future. "This move sends a strong signal to businesses about the government's seriousness in tackling public-sector inefficiencies".

Sohail said most previous privatisations had delivered value to both consumers and the state, arguing that the government's role should be to regulate markets rather than operate commercial enterprises.

That assessment is sharply contested by critics, who say Pakistan's privatisation record has been marred by weak governance, corruption and the entrenchment of private monopolies.

Ammar Ali Jan, academic and general secretary of the Haqooq-e-Khalq Party (HKP), said that over the past three decades, privatisation had failed by the standards of even global financial institutions. Citing Asian Development Bank assessments, he said more than 70% of Pakistan’s privatisations fell short of stated objectives.

"This is not a left-wing critique," he said. "Privatisation in the 1990s and 2000s created cartels, encouraged nepotism and hollowed out public institutions".

He argued that PIA's decline could not be blamed solely on excess labour, a common justification for privatisation. Instead, he pointed to years of mismanagement by politically appointed executives and private-sector professionals hired by the state. At the same time, he said, private airlines benefited from government subsidies as PIA deteriorated.

He also questioned why certain state institutions catering to elites continue to function efficiently while mass public services collapse. "It's not just PIA," he said, pointing to Pakistan Railways, Pakistan Telecommunication Company and public education as examples of long-term institutional decay without accountability.

In his comments to Geo News, former adviser to the finance minister Dr Khaqan Najeeb commended the PIA deal and said that it differs from earlier attempts.

"Privatisation has always been an essential microeconomic reform for Pakistan. After 19-20 years, it is a positive step that we have successfully privatised a major entity like PIA. This required cleaning up the balance sheet, removing liabilities and offering incentives to make the deal viable. With most of the proceeds reinvested into the airline, this could unlock significant hidden value and relieve taxpayers of previous losses," he explained.

Jan warned that asset sales cannot substitute for a long-term industrial strategy. "A UN Development Programme report estimates that $17.4 billion in subsidies and privileges accrue annually to elite groups, more than 90% of them in the private sector".

"There is no debate on how to do land reform or increase taxation on the landed elites, both urban and rural. No debate on how to deal with the sugar mills and all the cartels in different sectors of the economy. The only thing that gets chopped is the public sector."

"Without an industrial plan, this is just delaying the problem," the HKP leader said, comparing privatisation-driven reforms to repeated IMF bailouts. "Selling assets, minerals or strategic location cannot sustain the economy in the long run".