Govt Delays Handing Over 3 International Airports to Foreign Country

The government on Monday decided against an advisory service agreement with a World Bank Group arm for handing over Pakistan’s three international airports to a foreign country, well-informed sources told ProPakistani.

The Economic Coordination Committee (ECC) of the federal cabinet on Monday deferred a summary of the Ministry of Aviation on the engagement of the International Finance Corporation (IFC) as transaction adviser for the outsourcing of three airports.

Some cabinet members questioned the motivation behind the transaction advisory service agreement (TASA) to the ECC, claiming that it was not the appropriate forum. Certain clauses were also objected to by other members.

During a post-deadline meeting held on 30th December 2022, Prime Minister Shehbaz Sharif invited the outsourcing of the Karachi, Lahore, and Islamabad airports under a leading International Financial Institution (IFI) under the Public-Private Partnership Authority Act, 2017.

After due consideration of a request from the Pakistan Civil Aviation Authority (PCAA), the Public-Private Partnership Authority Board allowed them to directly engage an IFI as transaction advisor for the outsourcing of the operation of the aforesaid airports on 11th January 2023.

Subsequently, the PCAA engaged with all IFIs eligible for direct engagement as transaction advisors. However, only the International Finance Corporation (IFC), a part of the World Bank Group, indicated their interest.

They were asked to share their experience and other credentials which were evaluated against the selection criteria approved by the PCAA Board and were considered qualified to work as transaction advisors. The PCAA was authorized to negotiate with the IFC for settling the terms of their engagement.

Later, a draft TASA was reached with the IFC which was presented before the PCAA Board in its meeting held on 2nd March 2023. The PCAA Board approved the draft TASA but at the same time observed that since the agreement is based on a success fee model with penalties for failure to proceed with the transaction on the part of the client, there is a need for strong political commitment to the outsourcing of the operation of three target airports.

The PCAA Board directed that the draft TASA shall be placed before the Economic Coordination Committee of the Cabinet for their information and concurrence. The apex economic committee has now deferred the plan due to objections raised by some cabinet members. Some members felt that after the PM’s commitment, there was no need to seek additional pledges.