In an effort to address the country’s dwindling foreign exchange reserves, the government of Pakistan has approved a draft to outsource three of its major airports, namely Jinnah International Airport in Karachi, Allama Iqbal International Airport in Lahore, and Islamabad International Airport.
The move aims to attract direct foreign investment and provide world-class facilities to passengers. The Economic Coordination Committee (ECC), under the chair of Finance Minister Ishaq Dar, has started the outsourcing process within the scope of the Public-Private Partnership Act-2017 to engage private investors/airport operators through a competitive and transparent process to run the airports, develop appertaining land assets, enhance avenues for commercial activities, and garner full revenue potential.
According to a statement from the Finance Division, the ECC considered a summary of the Ministry of Aviation on the engagement of the International Finance Corporation (IFC), a part of the World Bank Group, as a transaction advisor for the outsourcing of three airports. After detailed discussion, the ECC approved the draft Transaction Advisory Agreement (TASA) reached with the IFC by the Pakistan Civil Aviation Authority (PCAA) for the outsourcing of the airports.
It should be noted that no details of the partnership or any agreement have been made official. However, Reuters reported that Pakistan has been in talks with Qatar to jointly run terminals at Islamabad, Karachi, and Lahore airports. Prime Minister Shehbaz Sharif visited Doha late last year to garner Qatari investment in the country’s energy and aviation sectors, which was followed by a pledge by the Qatar Investment Authority to invest $3 billion in Pakistan. Islamabad has been negotiating the deal with Doha for several months as part of an effort to find foreign investment for the cash-strapped nation of 220 million people.
Pakistan’s aviation sector is struggling, with the country’s national flag carrier running accumulated losses of nearly Rs400 billion Pakistani rupees. The country is also facing an acute balance of payment crisis, with its central bank reserves dipping so low as to hardly cover four weeks of imports. As of March 24, the foreign exchange reserves held by the State Bank of Pakistan (SBP) decreased by $354 million to $4.2 billion. However, the net forex reserves held by commercial banks stand at $5.6 billion, $1.3 billion more than the SBP, bringing the total liquid foreign exchange reserves of the country to $9.8 billion, as mentioned in the statement.
