The Economic Coordination Committee (ECC) of the Cabinet has approved outsourcing of Islamabad International Airport through international competitive bidding.
According to the Finance division, Federal Minister for Finance and Revenue Senator Mohammad Ishaq Dar chaired the meeting of ECC.
Sources told ProPakistani that the federal government has been considering various options to outsource the operation of major airports in Pakistan with the aim of effecting an improvement in passenger service and optimizing the revenue potential of the airport.
It was decided in the PM steering committee that in the first instance, only Islamabad International Airport shall be considered for outsourcing whereas the two remaining airports can be outsourced in light of the experiences and insights gained from outsourcing of IIA.
The International Finance Corporation in its inception report highlighted some issues including long outstanding PIA receivables, the uncertain macroeconomic conditions, PCAA concession fee, tariff charges escalation mechanisms, the fate of PCAA employees which could hamper the smooth execution of the outsourcing initiatives.
Sources also said that IFC also recommended permission for the concessionaire and CAA to maintain a foreign currency account with the SBP to ensure GoP can fulfill its obligations to ensure availability, convertibility, and transferability of foreign currency and mitigate against the potential loss of revenue for the concessionaire due to foreign exchange volatility.
IFC also emphasized the need for a service agreement between all these entities performing “reserve functions” and PCAA may not be held responsible for any breach of the agreed performance indicators.
IFC has prepared the State Support Agreement in line with recommendations and some of their concerns which are of an operational nature shall be addressed in the Service Level Agreement at a later stage.
As per the handout issued, the ECC also approved a summary of the Ministry of Aviation on a state support agreement for the outsourcing of Islamabad International Airport through international competitive bidding.
