National Assembly''s Standing Committee on Defence strongly recommended bailout package of Rs 58 billion for Pakistan International Airlines (PIA). The management of corporation said that PIA immediately needed financial restructuring of it''s loans and needed Rs 58 billion bailout package including Rs 45 billion for repayment of short term loan to avoid payments in interest on such loan and Rs 13 billion for immediate payments.
Meeting chaired by Dr Azra Fazal Pechuho approved the report of the sub-committee constituted to examine the problems faced by PIA in rescheduling of the loans and provision of new loans on minimum mark-up rates with few amendments.
Report of the sub-committee observed that PIA as of December 31, 2009 borrowed Rs 145 billion including fleet and non-fleet loans. Thus liability reached to Rs 141.47 billion by April 30, 2010. The main problems were the rescheduling of its loans for improving its balance sheet. The committee further learnt that national flying carrier has Rs 21 billion negative equity. PIA has failed to deliver despite availing 4 times rescheduling during the last ten years.
The sub-committee in its recommendations recommended to the government that PIA is national asset and due to bad governance and mismanagement incurred heavy losses; however, it should not be privatised. Finance ministry may provide support and renew the GOP guarantee against already obtained loans. MOF to provide support in restructuring of short term loans in to long term loans worth Rs 7.55 billion through National Bank of Pakistan''s at a minimum mark up ratio. The PIA should expedite approval process of master plan by the Economic Co-ordination Committee. The PIA may be allowed to float Foreign Currency Bonds with 1-2% profit for a certain fixed period to be purchased by overseas Pakistanis.
Secretary Defence Lieutenant General (Retd) Syed Athar Ali confided to the members committee that Ministry of Defence gave five presentations to Ministry of Finance for bailout package. In addition to this, in a recent meeting with President of Pakistan, a decision has been taken to de-list the Paris and New York hotels owned by PIA from privatisation list as these are now making profits despite recession in hotel industry. Chief Financial Officer who also presented in the meeting informed that PIA was in grave situation and needs Rs 58 billion bailout package to repay the short-term expensive loans.