Federal cabinet cancels Islamabad Airport outsourcing tender over revenue disagreement

ISLAMABAD: The federal cabinet has formally cancelled the tender to outsource the Islamabad International Airport (IIA) under the Public-Private Partnership (PPP) framework due to differences of opinion over the revenue sharing model.

According to the cabinet-approved tender guidelines, the government intends to retain 56-57 percent of the aeronautical and non-aeronautical revenues and allocate 43-44 percent to private operators.

However, Turkish consortium TERG – including Terminal Yapı, ERG Insaat, and ERG U – submitted a bid proposing 47.25% for the private sector. The bid did not meet the Minimum Revenue Guarantee (MRG) established by the cabinet, resulting in its rejection.

The Aviation Division stressed the strategic importance of Islamabad Airport as a key aviation hub, which guarantees maximum state control over its air and landside operations. Deputy Prime Minister Ishaq Dar played a key role in overseeing the review process, which brought high-level attention to the matter. Despite the involvement of Deputy Prime Minister Ishaq Dar and strong feedback from the Cabinet Committee on Privatization (CCoP), the failure to reach a consensus resulted in the cancellation of the tender.

The matter has been referred to the International Finance Corporation (IFC) for review, ensuring alignment with international best practices in airport management. Officials, including Deputy Prime Minister Ishaq Dar, stressed that while private sector participation is a priority, it must safeguard national interests and maximize public benefit. Future outsourcing may proceed through bilateral negotiations or a revised tender process.

The cancellation underscores the government’s focus on safeguarding national assets, with Deputy Prime Minister Ishaq Dar reiterating its commitment to transparent and fair procurement in key infrastructure projects.