Liabilities clearance: ECC allows PIA Roosevelt Corp to use $10m from pension fund

Islamabad: A meeting of the Economic Coordination Committee (ECC) of the Cabinet has allowed the PIA Roosevelt Investment Corporation to utilise $10 million from the pension fund to clear liabilities to avoid penal action by the local authorities.

Sources said that the meeting of the ECC presided over by Finance Minister Shaukat Tarin on August 30, on a summary moved by the Aviation Division recounted that on 10 September 2020, a summary was moved to the ECC for approval of $142 million to meet the financial challenge faced by Roosevelt Hotel Corporation (RHC) New York, USA.

Financial liabilities of the RHC included; (i) MSD Loan US$ 105.96 million; (ii) severance paid to union employees of the hotel US$13.7 million; (iii) ether expenses/liabilities US$ 14.34 million and pension fund withdrawal liabilities US$ 18 million.

In line with the ECC decision, the Finance Division arranged US$142 million funds through loan from the NBP and the Roosevelt Hotel Corporation utilised US$124 million out of US$142 million.

The balance amount of US$ 18 million approved by the ECC for pension fund is available with the NBP and this amount is to be disbursed to the Union employees after finalisation of negotiations with Attorneys of Union, which is likely to take time.

Meanwhile, the PIA-IL had made a request of US$ 30.3 million for recurring as well as one-off payments as carrying over cost of the RHC and the ECC approved the proposal including US$ 17.3 million.

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The ECC was told that the arrangement of funds of US$ 30.3 million by the NBP would take time in completion of codal formalities and procedural requirements.

The PIA-IL, on the other hand, stated that if the payment of local taxes and utilities is not made on time, the local authority will impose fine/penalty on RHC, which will create an awkward situation for it.

Therefore, it was requested that the PIA-IL may be allowed to utilise US$ 10 million out of US$ 18 million for pension fund available with NBP to clear their emergent liabilities and assured that US$ 10 million would be replenished into pension fund as soon as approved funds of US$ 30.3 million were arranged.

The ECC was proposed that the PIA-IL may be allowed to utilise US$10 million from US$ 18 million for pension fund available with the National Bank to clear emergent liabilities of the RHC as to avoid penal action by the local authorities. The meeting was further informed that the PIA-IL shall replenish US$ 10 million into pension fund withdrawal liabilities soon as approved fund of US$30.3 million are arranged and submit utilisation report of the funding support duly verified by the external auditors of the entity.

Copyright Business Recorder, 2021