ECC approves Rs8bn grant for cash-strapped PIA to meet emergency needs

• PIA needs Rs25bn, restructuring outstanding loans.
• Caretaker government wants to move towards privatisation.
• Aviation proposal approved for bridge financing through CAA.

ISLAMABAD: The Economic Coordination Committee (ECC) of the federal cabinet has approved Rs8 billion from the resources of the Civil Aviation Authority (CAA) as bridging financing to meet emergency requirements of the cash-strapped Pakistan International Airlines (PIA).

The CAA in its summary presented before the ECC had sought financial assistance of Rs25 billion on an immediate basis and restructuring of outstanding loans for the next six-month period in order to keep the airline afloat.

However, the caretaker government kept taking only half-baked decisions for approving only Rs8 billion as a bridge financing from CAA resources for the emergency needs of the national flag carrier, The News reported on Saturday.

“This emergent need of Rs8 billion will only help to make payment for Malaysia mainly and payment for a few other obligations,” said one participant of the ECC meeting while talking to The News here on Friday.

The PIA needs financial assistance of Rs25 billion and restructuring outstanding loans to the tune of Rs10.5 billion on a monthly basis for the next six months but the government is not in the mood to dole out any money from its kitty. Now it is in the position to further provide guarantees for ballooning up financial obligations.

Although, PIA had failed to come up with a viable restructuring plan in the past and every time they made just shallow claims of achieving turnaround at the time of securing money with the backing of the Finance Division, now the caretaker government used the IMF programme and its condition on the fiscal deficit with special reference of achieving the primary surplus of 0.4% of GDP as shackles for doling out anymore subsidy amount.

But now the PIA is heading towards shutdown but the caretaker government just wants to keep its operation intact and then move towards privatisation as early as possible.

According to the official statement issued by the Ministry of Finance after the meeting, interim Finance Minister Dr Shamshad Akhtar presided over a meeting of the ECC.

The meeting was attended by the caretaker Minister for Privatisation, Fawad Hassan Fawad, caretaker Minister for Planning and Development, Sami Saeed, caretaker Adviser to the Prime Minister on Aviation, Air Marshal Farhat Hussain Khan, federal secretaries, and other senior officers from relevant ministries. 

The meeting considered a single-item agenda submitted by the Aviation Division.

The Aviation Division submitted a proposal for the provision of financial support to PIACL through the Civil Aviation Authority for certain emergent needs of the airline.

After detailed discussion and deliberation, ECC decided to approve the proposal of the Aviation Division for bridge financing through CAA resources amounting to Rs8 Billion for PIA to meet emergent requirements related to overdue payments.

The ECC allowed the Aviation Division to proceed with the bilateral arrangement between the CAA and PIA.