New Delhi, Jan 19 (AHN) The privatisation of Pakistan International Airlines (PIA) in 2025 halted the airline's daily operational haemorrhaging but at a high moral and fiscal cost, a report has said, adding that it has come at the expense of the taxpayer.

According to a report in The Express tribune, the official announcement that the “Arif Habib-led consortium won a 75 percent stake in PIA with a bid of PKR 135 billion, is misleading, and deceptive”.

Dr Mohammad Zubair Khan, former Pakistan Minister of Commerce who worked at the IMF, writes that the transaction is structured such that “most of the total bid of Rs 135 bn never reaches the seller’s (government) pockets”.

The Government of Pakistan GOP will receive only Rs 10.125 bn (which is the actual sale price) paid to the seller for ownership. The remaining Rs124.875 bn will be injected into the airline after the sale. Additionally, the buyer has committed to inject another Rs80bn into the value of their own asset and not to the seller,” he argues.

He further states that when Rs 654 bn in liabilities that the government took over to make the airline "sellable" is factored in, the state has effectively paid roughly Rs 644 billion to get rid of the airline.

“This is ‘divestment at a loss’ designed to stop the ‘bleeding’ of future subsidies,” he says.

The article states that the “Revolving Door” Roles of Officials has raised concern in this lopsided arrangement.

“By converting commercial debt into a sovereign-backed bond at 12 percent fixed interest, the government has guaranteed bank profits regardless of PIA’s future performance. Even if the Roosevelt Hotel (held in the HoldCo) is sold for its $1 billion valuation, it will barely cover the interest burden leaving the burden of principal solely on the taxpayer,” the article adds.

According to the author, if the Roosevelt fetches $1 billion target after redevelopment, there will still be a shortfall of PKR 250 bn to clear the debt.

“And if the Roosevelt redevelopment takes the usual 8 years, the government will have added PKR 256bn in new interest costs at the exorbitant 12 per cent agreed, before the "wealth" is even created thus burning out the asset completely in the interim,” the report said.