TI Pakistan has disputed PIA's version on the award of contract for five Boeing 777-300ERs at $1.5 billion on unsolicited proposals. Adviser TI Pakistan, Syed Adil Gilani, in a letter sent to the Managing Director, PIA Captain Nadeem Khan Yousufzai on February 25, has drawn his attention to Transparency International Pakistan's two letters written to him earlier and expressed TI Pakistan's inability 'to understand the following statement' given in the meeting of the Senate Defence Committee on February 24, 2012.
"Managing Director PIA, Nadeem Khan Yousufzai on Friday informed the Senate Defence Committee that it would purchase aircraft from Boeing without the guarantee of government of Pakistan. The actual price is $190 million but due to our good past reputation, the company will provide us at $150 million and termed it a good deal. He assured the committee that it is a fair deal without any kickbacks and rejected reports in this regard. PIA reserves a slot for airlines and, from April 2012, induction of new airline will start and that will continue till 2015 until the old fleet is replaced. He said that the PIA will purchase five 777-300 ERs by the third and fourth quarters of 2013."
Transparency International Pakistan said that the statement to Senate Committee contradicts the joint statement issued by Boeing and PIA on February 20, 2012, which reads as under: "Boeing and PIA on Monday announced a firm order for five 777-300ER (extended range) air-planes, valued at nearly $1.5 billion at the list prices. The order also includes purchase rights to PIA for five additional 777-300ERs, said a press release issued by Boeing. The deal is part of PIA's long-haul fleet renewable programme aimed at accommodating the increased demand for air travel as well as introducing new routes. "With passenger traffic in our region accelerating, the new 777-300ER air-planes will continue to deliver the highest standards of technology and passenger comfort," said Captain Nadeem Yousufzai. "The 777-300ER is a perfect fit for PIA as it will generate more revenue and carry additional payload, while extending range capability," said Miguel Santos, Director International Sales of Boeing Commercial Airplanes. With this order, PIA's 777 fleet will grow to 14."
Adil Gilani said that though Transparency International Pakistan has not received any reply of PIA, it appears that PIA has clarified to Senate Defence Committee that the cost of each new 777-300ER air-plane is US $150 million and not US $300 million. He said that a copy of Boeing documents table 1C to the purchase agreement no. 2420, dated July 2011, received by Transparency International Pakistan from a complainant, shows that the price of 777-300ER is US $288.882 million of one aircraft, and US $341. 237 million on delivery date August 2015, going up to US $343.91 million for the fifth aircraft delivery in December 2015. Hence, the total cost of five Boeing 777-300 ERs to PIA is US $1.712 Billion.
Transparency International Pakistan has also quoted a story circulated by APP from Islamabad on February 14, 2012 as follows: "Federal Defence Minister, Chaudhry Ahmad Mukhtar Tuesday said that Pakistan is fully capable to defend its territorial integrity and counter India's military preparedness and its 'war doctrine'. He made these remarks while talking to reporters after attending the signing ceremony of acquisition of Boeing 777 aircraft by PIA here. On the acquisition of Boeing 777 aircraft for PIA, he said these aircraft would enhance performance of the national flag carrier. "Each aircraft is not only US $150 million cheaper in price than our old aircraft but also consumes less fuel," he added.
Briefing the media, Nadeem Yousafzai said that with signing of the purchase agreement, PIA would start implementing its plan to replace the airline with new aircraft. He hoped that after acquisition of the five aircraft, more than 3,000 additional jobs would be generated in future. He said Boeing company made a business offer for the sale of five Boeing 777 family aircraft to be delivered in 2015, adding that a Memorandum of Understanding was signed during Dubai Air Show on November 15, 2012.
He said that PIA was able to successfully negotiate the deal with Boeing company at a price 13.5 percent lower than the price of aircraft delivered in 2008. Director International Sales of Boeing company, Miguel Santous pointed out that co-operation between Boeing and PIA spans over 20 years and would also continue in future. Earlier, Federal Defence Minister, Ahmad Mukhtar and Acting US Ambassador to Pakistan, Richard Hoagland exchanged the purchase documents, signed by the MD, PIA and Director International Sales, Boeing, Miguel Santous."
The news item indicates that "you as the Managing Director, PIA has stated that the new purchase cost per 777-300ER is 13.5 percent less than 2008 delivered cost, which, according to Boeing document to the purchase agreement no. 2420, dated July 11, 2000, shows that the price of 777-300ER is US $190.235 million of one aircraft, and US $249.30 million on delivery date January 2007.
Accordingly, cost of one 777-300ER @ discount of 13.5 percent, in the 2012 deal should be $164.55 million. Transparency International Pakistan, he said is still awaiting response of PIA and copies of the Evaluation Report and Contract Agreement, under Rule 48 and Article 19-A of the constitution. Following is table IC to purchase agreement no. 2420 aircraft delivery, description, price and advance payments.