One of the effects of the bid of Rs10 billion made by the sole bidder at the auction on October 1 for PIA has been that the KP and Punjab governments have expressed an interest. The KP government’s Board of Investment Vice-Chairman has written to the Government of Pakistan expressing desire to take part in the bidding process, and then to say that the KP government would be willing to top the Rs10 billion bid for it. PML(N) President Mian Nawaz Sharif in New York has told reporters that he had advised his daughter Mariam Nawaz, who is Punjab CM, that the Punjab government should either buy PIA and rebrand it, or set up a new airline called Air Punjab. It is to be wondered why an astute businessman as Mr Sharif was, should think it was a good idea for the Punjab government to get into aviation at a time when the industry is in freefall.
It is only to be assumed that he and Ms Nawaz are looking at the example of Air Sial, the private airline launched in 2020 by the Sialkot Chamber of Commerce and Industry, which had first built an airport at Sialkot. One question they have to answer, as does the KP government, is where the money is coming from. How much money? Obviously more than Rs10 billion, and nearer to the Rs85 billion set as the reserve price. Does either province have that kind of money to spare? Even if either had that sort of cash, the sources bear thinking about. There is only provincial tax revenue; the rest are federal transfers (mostly under the NFC Award) for non-development expenditure, and cash development loans from the federal government for development spending (mostly foreign loans, as the provinces cannot borrow directly). The Punjab government has already filed to meet its commitment to a surplus, with the result that the federal government is going to miss one of its targets for a successful IMF review.
The IMF will probably have something to say about both offers. First, neither has offered a proper business plan. It is not just a matter of buying the airline, but of putting up more money. Then there is the question of why a provincial government should get into the aviation industry at all. Neither government has run any of its corporations well, and neither seems likely to do more with an airline than throw away the taxpayer’s money.