ISLAMABAD:
The government has assured the International Monetary Fund (IMF) of finalizing the sale of Pakistan International Airlines (PIA) by July. However, the future of the Roosevelt Hotel in New York remains uncertain after the U.S. government decided to terminate its $228 million lease agreement prematurely.
During a briefing to the IMF on Pakistan’s stalled privatization program, federal authorities revealed plans to privatize five to seven state-owned enterprises. These include PIA, three financial institutions, and three power distribution companies, according to government sources. Among the financial institutions slated for privatization is the Zarai Taraqiati Bank Limited (ZTBL), which the government aims to sell by November this year.
The IMF was also informed that the Cabinet Committee on Privatization (CCOP) is yet to decide whether to sell the Roosevelt Hotel or enter into a joint lease agreement. The hotel, owned by PIA, is located in one of the world’s most expensive property areas. It boasts 1,025 rooms and was leased to the New York City Government for immigrant housing in July 2023 under a three-year deal.
However, the New York City Government has reportedly issued a notice to terminate the lease by July 2024, a year before its scheduled expiration. This early termination is expected to result in an $80 million loss for Pakistan. The city government had agreed to pay $210 per room for the third year of the lease.
Last November, the CCOP had expressed concerns that former U.S. President Donald Trump’s immigration policies could jeopardize the $228 million deal. Authorities are now exploring alternative business options for the hotel. Despite hiring financial advisors, including Jones Lang LaSalle Americas at a cost of Rs2.1 billion, the government has yet to finalize a decision on the hotel’s privatization. The advisor’s fee includes milestone-based payments and a success fee of 0.95% of the sale proceeds.
The IMF was informed that the CCOP, based on recommendations from a committee led by Federal Minister for Petroleum Ali Pervaiz Malik, is considering privatizing the Roosevelt Hotel through open bidding. This comes after Saudi Arabia failed to formally express interest in acquiring the property. The committee has proposed selling the hotel via competitive bidding but has left the final decision—whether to sell, develop it as a joint venture, or lease it for 99 years—to the Privatisation Commission.
As of late December, no foreign government had formally expressed interest in acquiring the hotel under a government-to-government arrangement, which is required to invoke the Inter-Governmental Commercial Transaction Act.
**PIA Privatization:**
The Privatisation Ministry updated the IMF on the status of PIA’s privatization, setting a July 2025 deadline to sell the loss-making airline. A previous attempt to privatize PIA failed after a weak scrutiny process resulted in a real estate developer being the sole bidder, offering Rs10 billion—far below the minimum asking price of Rs85 billion.
The government is now gauging market sentiment before issuing an Expression of Interest (EOI) to investors by the end of this month. Authorities are uncertain about the success of this second attempt, as they assess investor interest in acquiring a financially struggling entity. Three parties are expected to participate in the bidding, including two that withdrew earlier due to unmet conditions, such as waiving an 18% sales tax on aircraft leases and removing Rs45 billion in liabilities from PIA’s balance sheet.
The IMF has agreed to relax these conditions, along with reopening European routes, which are seen as key incentives for attracting investors.
**Power Sector Privatization:**
The government plans to sell three power distribution companies—Faisalabad, Islamabad, and Gujranwala—by December this year. The decision to sell them collectively or individually will depend on the advice of financial advisors. The IMF inquired whether these companies carry any commercial debt, to which the government clarified that no power generation companies are slated for sale this year.
**Financial Institutions:**
The government informed the IMF that the United Arab Emirates (UAE) has expressed interest in acquiring the First Women Bank Limited as a full commercial bank. The deal is expected to be finalized by the end of May, with the UAE preferring a government-to-government transaction over open bidding.
Additionally, the government is in the process of hiring a financial advisor for the sale of ZTBL, aiming to complete the transaction by November. The House Building Finance Company is also expected to be sold next month, following multiple missed deadlines.
The ongoing privatization efforts reflect the government’s commitment to addressing financial challenges and meeting IMF conditions, though uncertainties remain regarding the successful execution of these plans.
