ISLAMABAD: The federal government has decided to abandon negotiations withthe United Arab Emirates for outsourcing the management and operations ofIslamabad International Airport, following a lack of progress and explicitdisinterest from Abu Dhabi. Official sources confirmed that repeated delaysby the UAE in nominating a participating entity prompted Islamabad to issuea final call letter seeking clarity. In response, the UAE indicated it wasunable to confirm any operator and was not keen to proceed under theproposed government-to-government framework. This development marks asignificant pivot in Pakistan’s aviation sector reform strategy, which hadinitially favoured targeted outsourcing to friendly nations beforeembracing broader privatisation.
The decision comes after months of stalled bilateral discussions that beganwith optimism for a government-to-government arrangement. Several draftframework agreements were exchanged between Pakistani and UAE authorities,with the scope strictly limited to Islamabad International Airport to testthe model. However, the UAE side consistently failed to name a specificcompany or consortium, leading to prolonged uncertainty. Sources familiarwith the matter revealed that the Pakistani negotiation committee, led bythe Adviser to the Prime Minister on Privatisation, pursued the proposaldiligently but eventually concluded that further engagement wasunproductive. The move aligns with the government’s broader economicreforms, influenced by commitments to international lenders for improvingefficiency in state-owned assets.
In place of the shelved outsourcing plan, Islamabad International Airportwill now be added to the active privatisation list maintained by thePrivatisation Commission. This step follows the government’s recentexperience with the successful privatisation of Pakistan InternationalAirlines, which demonstrated potential for attracting investment andenhancing operational performance through competitive processes. Byincluding Islamabad alongside Karachi’s Jinnah International Airport andLahore’s Allama Iqbal International Airport, authorities aim to pursue anopen, transparent bidding mechanism likely involving public-privatepartnerships or full concessions. The shift is expected to generate greaterrevenue shares for the state while bringing international expertise toupgrade facilities and passenger services.
The original outsourcing initiative formed part of Pakistan’s wider push tomodernise its aviation infrastructure, which has long faced challengesincluding outdated management practices and limited capacity expansion.Earlier proposals had identified major international airports for potentialhandover to operators from friendly countries such as the UAE, SaudiArabia, Qatar, China or Turkey under long-term concessions spanning up to25 years. Islamabad International Airport, also known as Benazir BhuttoInternational Airport in some contexts but officially renamed, wasprioritised due to its strategic location and role as the capital’s primarygateway. The airport, operational since 2018, handles significant domesticand international traffic but has been criticised for inefficienciescompared to regional peers.
Analysts view the UAE withdrawal as a setback for government-to-governmentmodels in privatisation, which were seen as faster alternatives tocompetitive tenders. The UAE had been approached following high-levelengagements, with expectations that Abu Dhabi-based entities could injectcapital and operational know-how similar to successful models in otherGulf-managed facilities. However, the inability to finalise a nominatedentity underscored differing priorities or risk assessments on both sides.Some reports suggest the UAE sought broader concessions, includinginvolvement in multiple airports or route monopolies, which Pakistan deemedunacceptable. The termination of talks thus reflects a pragmaticreassessment, prioritising competitive privatisation to maximise value andtransparency.
The inclusion of Islamabad International Airport in the privatisationpipeline is anticipated to accelerate reforms across the aviation sector.The Privatisation Commission has already recommended open competitiveprocesses for such assets, following directives from relevant cabinetcommittees. This approach is expected to draw interest from global airportoperators experienced in high-traffic hubs, potentially improving servicequality, cargo handling and ancillary revenues. Passenger numbers atIslamabad have grown steadily post-relocation from the older facility,underscoring the need for professional management to sustain expansion amidrising travel demand. The government’s strategy now emphasises learningfrom the PIA transaction, where privatisation yielded positive outcomes indebt reduction and operational revival.
Broader implications for Pakistan’s economic agenda include strengthenedadherence to structural benchmarks set by international financialinstitutions. Privatisation of key infrastructure assets forms a corecomponent of ongoing bailout programmes aimed at fiscal sustainability andinvestment attraction. Moving away from bilateral deals towardmarket-driven processes could enhance investor confidence by reducingperceptions of preferential treatment. Officials maintain that the decisionsafeguards national interests while pursuing efficiency gains, withIslamabad Airport positioned as a flagship case for replicating successacross Lahore and Karachi facilities.
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The pivot also highlights challenges in bilateral commercial engagementswith strategic partners. While Pakistan and the UAE enjoy robust economicties, including substantial remittances, trade and investment flows,infrastructure deals require alignment on terms and expectations. Thestalled talks serve as a case study in navigating such complexities,prompting a recalibration toward multilateral or competitive frameworks. Asthe government advances the privatisation list, stakeholders anticipatedetailed timelines for expressions of interest, financial adviserappointments and eventual bidding rounds to ensure smooth transitions.
Source:https://tribune.com.pk/story/2588574/airport-moved-to-privatisation-list
Privatisation Commission
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