ISLAMABAD: Pakistan on Wednesday formally appointed the Asian Development Bank (ADB) as the financial and transaction adviser for the outsourcing of Islamabad International Airport’s operations.
Last week, the Privatization Commission Board reviewed the terms of a transaction advisory services agreement (TASA) with the lender and gave its approval.
The TASA was signed by Privatization Commission Director General Shahid Dayo and ADB Country Director Emma Fan, an official announcement said.
Adviser to the Prime Minister on Privatization and Privatization Commission Chairman Muhammad Ali, Privatization Commission Secretary Usman Akhtar Bajwa, Privatization Division Secretary Hammad Shamimi and ADB Deputy Country Director Syed Hussain Haider witnessed the signing.
Under the agreement, ADB would provide comprehensive transaction advisory services, including technical, financial, legal, environmental and commercial expertise, to support the structuring and implementation of the transaction in accordance with international best practices.
“The advisory services will facilitate a transparent, competitive and market-driven process aimed at attracting leading international airport operators and investors,” the Privatization Commission said.
The agreement marked an important milestone in the implementation of the government’s privatization program to improve the efficiency, service quality and long-term sustainability of Islamabad International Airport through private sector participation, while ensuring transparency, competitiveness and value for the people of Pakistan.
“The outsourcing process is expected to be completed within nine months, while the due diligence phase is expected to conclude within three months”, a senior privatization commission official told a Senate panel on Tuesday.
Separately, a single financial advisor will be appointed for the outsourcing of Karachi and Lahore International Airports, with preparatory work already underway, he said.
The agreement with the ADB marks the first instance in which a multilateral organization will assist a privatization transaction in the country.
In February, the board formed a negotiation committee to engage with the ADB and discuss terms for a financial advisory services agreement, which then finalized a revised draft agreement with certain modifications entailing indemnity protections to the ADB to avoid litigation as a multilateral agency.
The board also expressed confidence that the ADB, with its expertise and experience, would be able to successfully complete this important transaction swiftly while ensuring maximum competition and transparency.
Islamabad International Airport will be outsourced to a qualified private sector operator under a long-term concession framework through a competitive bidding process. The privatization is expected to enhance operational efficiency, improve passenger experience and align airport services with international best practices.
The government is targeting the privatization of the airport during the current fiscal year.
The contract appointing ADB as transaction adviser was revised with certain changes to its terms and conditions, including indemnity clauses due to its multilateral status. The negotiated terms of the contract proposed by the Privatization Commission were approved by the Cabinet Committee on Privatization.
The process for hiring financial advisers for outsourcing international airports in Karachi and Lahore would begin immediately, as previous government-to-government discussions had not progressed as expected.
Both airports were expected to attract more than $500 million each in fresh investment, Ali told Dawn a few days ago.
The board also approved the appointment of chartered accountancy firm BDO Ebrahim and Company as external auditors for the three financial years from 2025-26 to 2027-28, on the recommendation of the board’s Audit Committee.
It resolved to continue ensuring transparency, efficiency and the maintenance of high standards to further strengthen investor confidence in the government’s privatization program, according to an official statement.
In June 2024, the government made privatization its key priority and directed that Islamabad International Airport be outsourced first.