The Government of Pakistan has officially cancelled the tender for outsourcing Islamabad International Airport (IIA) under the Public-Private Partnership (PPP) framework. The decision follows unresolved disagreements over the revenue-sharing model proposed by the bidders.
As per the Cabinet-approved guidelines, the government intended to retain 56-57% of both aeronautical and non-aeronautical revenues, leaving 43-44% for the private operator. However, the Turkish consortium TERG—comprising Terminal Yapi, ERG Insaat, and ERG U—submitted a bid offering 47.25% for private sector participation. This proposal fell short of the Minimum Revenue Guarantee (MRG) set by the government, leading to its rejection.
Strategic Importance and Government Oversight
The Aviation Division underscored the strategic significance of Islamabad Airport as a critical aviation hub, justifying the need for stronger state control over airside and landside operations.
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The evaluation process was closely monitored by Deputy Prime Minister Ishaq Dar, highlighting the high-level scrutiny involved. Despite prompt assessments by the Cabinet Committee on Privatisation (CCoP) and active involvement from Ishaq Dar, the failure to reach a mutually acceptable revenue model led to the tender’s cancellation.
Future Prospects and Government Commitment
The matter has now been referred to the International Finance Corporation (IFC) for a comprehensive review, ensuring alignment with global best practices in airport management. Government officials, including Deputy Prime Minister Ishaq Dar, have reaffirmed their commitment to private sector participation but stressed that any future outsourcing must prioritise national interests and maximise public benefits.
Future efforts to engage private operators may proceed through bilateral negotiations or a revised tender process. This cancellation underscores the government’s broader objective of safeguarding national assets while upholding principles of transparency and fair procurement in critical infrastructure projects.