IMF allows removal of sales tax on PIA transaction, no additional guarantees for buyers, says PC chairman

Chairman of the Privatisation Commission Muhammad Ali said that the International Monetary Fund (IMF) has approved the removal of sales tax on the PIA transaction but emphasized that no further assurances would be extended to investors. 

In a recent interview with a private TV channel, Ali said that the government aims to finalise the sale of PIA by the end of this year. However, the prospective buyers will not be offered any guarantees in the process. “Governments change, and running airlines or businesses is not the mandate of provincial administrations,” he stated.

The ongoing privatisation efforts were also addressed, with Ali noting that smaller transactions, such as the partial transfer of First Women Bank, had been prioritised before moving to larger deals. The privatisation of entities like Islamabad Electric Supply Company (IESCO), Faisalabad Electric Supply Company (FESCO), and Gujranwala Electric Power Company (GEPCO) is also on the government’s agenda for the coming year, Ali confirmed.

Addressing concerns over government-to-government (G2G) deals, Ali suggested that Pakistan’s own governance challenges, including corruption and economic vulnerabilities, had weakened its position in such negotiations. He emphasized that competitive, transparent processes are preferable to G2G arrangements, which may not always protect national interests.

He also provided insights into the challenges facing the energy and infrastructure sectors. On K-Electric’s privatisation, he mentioned that the government had yet to resolve which authority, NEPRA or the government, should approve the transfer of shares. He also acknowledged that the initial sale of K-Electric suffered from insufficient due diligence.

In terms of infrastructure, Ali discussed the need for significant investment in airports, revealing that both Karachi and Lahore airports require around $1 billion each for expansion. He expressed optimism that private operators would be able to mobilize the necessary capital once the airports are privatized.

On the gas sector, Ali stated that growth had stalled and that structural reforms, including the sale of Sui gas companies, were essential for future progress.