Key Takeaways
- The Privatisation Commission Board approved the signing of a transaction advisory services agreement with the Asian Development Bank.
- This move aims to enhance operational efficiency and align airport services with international best practices.
- The government targets privatising Islamabad International Airport during the current fiscal year.
The Privatisation Commission Board has given its approval for the signing of a transaction advisory services agreement (TASA) with the Asian Development Bank (ADB) to oversee the outsourcing of operations at Islamabad International Airport. This decision was made following a meeting presided over by Adviser to the Prime Minister and the Chairman of the Privatisation Commission, Muhammad Ali.
In February, the board had formed a negotiation committee to engage with ADB for terms of a financial advisory services agreement. The committee's recommendations were reviewed and approved during this recent meeting, which also included discussions on certain changes to the contract conditions due to the multilateral status of ADB.
The privatisation process is expected to bring about significant improvements in operational efficiency and passenger experience at Islamabad International Airport. According to Muhammad Ali, the airport will be outsourced to a qualified private sector operator under a long-term concession framework through a competitive bidding process. The government has set its sights on completing this privatisation during the current fiscal year.
The appointment of ADB as transaction adviser was revised with specific changes, including indemnity clauses. These terms were approved by the Cabinet Committee on Privatisation and are expected to ensure maximum competition and transparency in the outsourcing process.
In addition to Islamabad International Airport, the government plans to initiate a similar process for Karachi and Lahore international airports. Previous discussions with governments had not progressed as hoped, leading to immediate action being taken to hire financial advisers for these airports. Both are anticipated to attract over $500 million each in fresh investment.
The privatisation of Islamabad International Airport is part of the government's broader strategy to reduce its involvement in commercial spaces and promote the private sector. Finance Minister Mohammad Aurangzeb highlighted this during his FY25 budget speech, stating that the government should not be in business. Prime Minister Imran Khan has expressed strong support for reducing government interference in the commercial space.
To further strengthen investor confidence in the privatisation programme, the board also approved the appointment of chartered accountancy firm BDO Ebrahim and Company as external auditors to audit the financial years from 2025–26 to 2027–28. This move underscores the government's commitment to maintaining transparency and efficiency.
