As part of wider economic reforms encouraged by the IMF to reduce fiscal strain, Pakistan has been attempting to offload and privatize PIA, the state-owned airline riddled with debt, since February. The final bidding process saw one bid from Blue World City — Rs 10 billion ($36 million) for a 60% stake compared to the target price of Rs 85 billion ($306.5 million) set by the government. Later, the Khyber Pakhtunkhwa (KP) Government stated that they would be willing to offer a higher bid.
Pakistan is having to entertain local buyers, as previously interested foreign entities, primarily from the Gulf, have shown little to no enthusiasm for a takeover. The shortlisted local buyers included Habib Corp, Fly Jinnah, YB Holding Consortium, Pak Ethanol, and Blue World City.
Briefly on Blue World City
Blue World City is a real estate development group based in Islamabad owned by BGC-IGC. The group’s projects and ambitions include creating a city within Islamabad, theme parks, housing societies, and shopping malls. This new “Blue World City” and its future counterparts are supposedly meant to become economic zones aligned with CPEC. The group’s owner, Naeem Ejaz, is an elected politician from the PMLN, one of the ruling coalition parties of Pakistan.
However, the group is accused of creating its own “land mafia” to seize disputed land from other housing societies — land which has not been officially bought by either party. Blue World and other groups pay and heavily arm their “land mafias” to fight against each other to increase their own territories, exacerbating the violent culture in South Asia associated with housing societies and ancestral land. As a result, Blue World has become embroiled in a multitude of legal battles, primarily connected to land seizures, fake files, and bribery.
Despite the Pakistani government’s desperation, selling to Blue World (a group synonymous with land grabbing) would be a terrible mistake and would further damage this current government’s political credibility.
On KP’s Bid - My Take
The KP government alleged that Blue World’s offer represented Chinese interests and stated that they would be willing to offer a far higher price to preserve the national airline. For a province to take such a large stake in PIA could disrupt interprovincial relationships, particularly in light of Pashtun-Punjabi ethnic divisions as well as political divisions between provinces. However, a provincial solution may be feasible if all provinces were to be included in the acquisition of PIA, ensuring equitable ownership among provinces.