Govt Ranks $8.47m Airport Adviser First Despite 35% Cheaper Rival

ISLAMABAD: The consortium that topped the race to advise Pakistan on outsourcing its Karachi and Lahore airports quoted $2.2 million more than its closest rival. Under the government’s own scoring rules, that gap never threatened the result.

The Privatisation Commission posted its final evaluation report on its website on October 10. The report shows an EY-led consortium quoting an evaluated $8.466 million for financial advisory work on Jinnah International Airport, Karachi, and Allama Iqbal International Airport, Lahore. A Raiffeisen-led consortium offered to do the same job for $6.25 million.

The Pakistan airport outsourcing process has brought financial advisory costs into focus after the government's evaluation revealed a $2.216 million difference between competing bids for Karachi and Lahore airports.

The difference comes to $2.216 million, or 35.45pc.

Where the cheaper bid lost

The commission’s formula gave technical strength 80pc of the marks. Price carried just 20pc.

That split lets a costlier bidder win comfortably, provided its technical lead holds. EY’s group earned 93.33 raw technical marks. The Raiffeisen consortium managed 72.83, a gap of more than 20 marks.

Once the commission applied its weighting and folded in price, final scores stood at 99.12 for EY’s consortium and 82.43 for Raiffeisen’s. The fee difference, confined to a 20pc price component, could not close that distance.

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The commission describes the $8.466 million as an evaluated cost that mixes a retainer with success fees. That detail changes the arithmetic for taxpayers.

Retainers pay advisers for work as they do it. Success-based payments would depend on the conditions of the eventual agreement, which the evaluation report does not disclose.

Nothing in the report confirms that the government has paid any amount so far. The report also does not show whether the final agreement kept every financial term of the winning bid. Only the signed contract and its payment schedule can settle the real public cost.

August decision, October price tag

The commission’s board first named the EY-Parthenon-led group as top-ranked at its 257th meeting on August 11. Muhammad Ali, the prime minister’s adviser on privatisation, chaired that meeting. The board also set up a negotiation committee to finalise the Financial Advisory Services Agreement.

The August announcement named the leader. The October report adds what it left out: the price, and how far apart the two bids stood.

Islamabad International Airport runs on a separate track. The government brought in the Asian Development Bank as financial adviser for a long-term concession there.

No irregularity, but a value question

The evaluation shows no breach of procurement rules. The commission applied its stated weighting, and the higher-scoring bidder came out on top.

The harder question concerns value. A transaction adviser shapes the deal itself: it structures the commercial terms, sets the bidding framework and steers negotiations with prospective operators. Those terms will govern how private firms run two of the country’s busiest aviation gateways for years.

The adviser will not run either airport. Selecting an operator remains a separate process further down the line.

The government has ranked technical expertise above a potential $2.2 million saving. Whether that decision delivers value for taxpayers will depend on the final advisory contract and the airport concessions that follow.