Roosevelt Hotel: AD presents ‘incomplete’ leasing plan to ECC

ISLAMABAD: The Aviation Division (AD) has reportedly presented an ‘incomplete leasing plan’ of Roosevelt Hotel, New York to the Economic Coordination Council (ECC), seeking its approval urgently, fearing that Roosevelt Hotel Corporation (RHC), could be land marked any day, well informed sources in Aviation Division told Business Recorder.

On July 7, Aviation Division secretary noted that RHC New York is owned by PIA-Investment Limited (PIA-IL), a subsidiary of PIAC. It was added that hotel business has been badly affected as a result of Covid-19 pandemic and had to be shut down in December 2020 with the approval of cabinet to avoid cost of $37 million per annum.

Aviation Division explained that earlier on 2 September 2020, ECC had approved $142 million for RHC to payoff outstanding loan, severance charges of about 500 employees and other liabilities such as local taxes, insurance etc.

Subsequently, ECC again approved $30.3 million on September 15, 2021 as carrying over costs for 2021. Pursuant to ECC decisions, Finance Division had arranged funds through loan from National Bank of Pakistan.

The ECC was informed that the Cabinet Committee on Privatization (CCoP) on July 2, 2020 approved leasing of RHC site for setting up a joint venture project for prospective mixed used development, the best suited mode of privatisation as delineated in the PC Ordinance, 2000 and directed PC to initiate the appointment of Financial Advisor to undertake the exercise in its meeting held on July 02, 2020.

However, the litigation in Tethyan Copper Company (TCC) in a Reko Diq case, halted the process for appointment of FA.

Subsequently, after out of court settlement with TCC, the office of Attorney General of Pakistan had advised Aviation Division to initiate the process of appointment of FA and PC was requested accordingly.

Roosevelt Hotel: Inter-ministerial body being revived to sort out issues

Aviation Division further shared two serious issues that confronted PIA-IL’s management - one related to illegal demand from the union employees and the other land marking of RHC. It was stated that Aviation secretary along with PIA-IL board members held discussions with all concerned, led by Ambassador of Pakistan in USA. A post visit report was also submitted to the office of the Prime Minister on May 23, 2022.

The PMO had directed Aviation secretary to brief the board of directors of PIA-IL of RHC and any firmed-up proposal be presented to the competent forum for further directions.

Secretary Aviation, in his capacity as Chairman PIA-IL Board convened a meeting and after deliberation, requested for GoP’s decision on the following proposals: (i) in view of the foregoing onerous demands by the Union, and to mitigate the risk of land marking, GoP to reconsider its earlier decision regarding permanent closure of the Hotel and to re-open it; (ii) PIA-IL/RHC to explore the option of re-opening the Hotel either on its own or through third-party short-term leasing arrangements.

Firm proposals for the option with comparative financial analysis would be presented to the competent forum after conduct of adequate due diligence by the professionals;(iii) PIA-IL/RHC would continue negotiations with the Union, and would try for restoration of status quo ante, however, if it fails, then a firm commitment be made to the Union for a component of the Hotel as part of re-development of the Roosevelt’s site; and (iv) Privatisation Commission be requested to expedite the implementation of CCoP’s earlier decision for appointment of financial advisor to undertake the envisaged leasing of Roosevelt’s site for setting up a joint venture project for the prospective mixed used development through the best suited mode of privatisation as delineated in the Privatisation Commission’s Ordinance, 2000.

The matter was discussed briefly by the ECC and Aviation Division was directed to provide additional information and supplemental documentation on the proposals for further deliberation. Aviation Division was further directed to share studies conducted/ business plan developed with reference to the proposal, if any, before the next meeting of ECC. It was further desired that CCoP should also be brought on board.

The Secretary Aviation indicated urgency and stated that the issue merits attention as RHC could be land marked any day. However, on directions of the forum, Secretary Aviation agreed to provide supplemental information on the proposal for consideration of the forum in its next meeting. The Economic Coordination Committee (ECC) of the Cabinet deferred the item and directed the Aviation Division to provide supplemental information on the proposal for further deliberation on the matter in the next meeting of ECC.

Copyright Business Recorder, 2022