ECC to Consider Another Bailout for PIA’s Financial Crisis

The Economic Coordination Committee (ECC) is scheduled to meet on Tuesday (today) to discuss a six-point agenda, including the government support required by Pakistan International Airlines (PIA).

Finance Minister Asad Umar will chair the meeting to discuss six points with PIA at the top of the list.

PIA is in a serious financial crisis as it failed to pay outstanding dues of Rs. 17.3 billion to Pakistan State Oil (PSO).

The aviation division will brief the committee on PIA’s overall position and developments regarding the restructuring plan.

The Finance Ministry has reportedly expressed reservations at PIACL for persistently seeking financial support subsequent to a new PIA request for additional guarantees of Rs 15.5 billion to keep the airline afloat.

During the financial year 2018-19, the ECC approved GoP guarantee amounting to over Rs 24 billion exclusively for engine overhaul requirements. The Finance Ministry further stated that the current level of GoP guarantee, other than engine overhaul, stood at Rs 187 billion, suggesting that PIA should look inward instead of easy access to borrowing. Finance Division is also servicing PIA’s debt with a budgetary allocation of Rs 18 billion for the current financial year.

Chief Executive Officer, PIACL gave a presentation to the Prime Minister on January 1, 2019 where the airline’s current state of affairs and way forward were presented, highlighting the key aspects for the sustainable operations which are dependent upon efficient operations supported by timely cash flow management requiring GoP support.

As short-term measures, key steps approved were the execution of smooth Hajj operation, recovery of grounded aircraft, recovery and acquisition of ground support equipment, restoration of the in-flight entertainment system, and payments to be made to the long outstanding dues of vendors for supplies and services.

The ECC is likely to approve financial support for the national flag carrier.

Approval of necessary amendments and exemptions for the Gwadar port and Gwadar free economic zone is also included in the agenda. A summary prepared by the maritime affair division will be presented before the committee.

The petroleum division will present a summary to the ECC regarding new criteria for the issuance of petroleum product marketing licenses as well as a separate summary on the Machike-Tarujabba oil pipeline project.

The oil pipeline project will transport dual oil products including diesel and petrol to the upcountry.

A plan for improvement in the cotton crop in the Kharif season of 2019 will also be presented during the meeting by the national food security and research division.