The federal government promised on Tuesday sovereign guarantees to Pakistan International Airlines (PIA), paving the way for the national flag carrier to borrow Rs1 billion from Faysal Bank for repair of Boeing engines and clearing outstanding fuel bills ahead of Hajj operations.
The decision was taken by the Economic Coordination Committee (ECC) of the cabinet, chaired by Finance Minister Ishaq Dar. The meeting was held at the P Block of Pak Secretariat as sit-ins staged by protesters at the Constitution Avenue blocked access to Prime Minister’s Office.
However, the ECC deferred approval of a summary submitted by the Ministry of Water and Power that called for introducing a new policy to attract private investment in power transmission lines.
It gave the green signal to the summary of Aviation Division that sought guarantees to give support to PIA in borrowing Rs1 billion. The airline has already exhausted its borrowing limits and commercial banks are reluctant to provide loans without federal government guarantees.
PIA is seeking the credit line in an effort to repair Boeing 747 engines that are currently parked in Jordan and partly clear dues of Pakistan State Oil. It is going to start Hajj flights from Thursday, the single largest operation that is often mismanaged due to lack of aircraft.
Aviation Division Secretary Mohammad Ali Gardezi claimed that financial discipline had been put in place over the last one year to bring the air carrier back on track. He said the new loan would be spent on clearing liabilities of PIA to smoothen the upcoming Hajj operation.
The finance minister asked the PIA management to improve its performance financially and provide quality service to its clients. He also underlined the need for cash flow discipline in order to effectively pursue the turnaround plan.
The ECC directed the Aviation Division secretary that the loan should only be utilised for the engine and component support programme and for ensuring fuel supply to the airline.
Power transmission lines
The committee put off decision on a new policy for attracting private sector investment in power transmission lines after learning that the Ministry of Water and Power had not taken views of all the ministries concerned.
The government is planning to encourage private sector capital injection in a bid to ease the burden on the public sector.
However, Federal Board of Revenue Chairman Tariq Bajwa said in the meeting that the Ministry of Water and Power had not shared with it the draft of the policy. He was of the view that the policy offered fiscal incentives that would have a direct bearing on the country’s revenue generation capacity.
The ECC allowed the National Transmission and Dispatch Company (NTDC) to approach the National Electric Power Regulatory Authority for approval of the agreed tariff with Power Generation and Transmission Management Company, Iran (Tavanir).
NTDC has been purchasing 74 megawatts from Tavanir since November 2002 for supply to the Makran Division, Balochistan. The last contract between the two expired on December 31, 2013 and Tavanir has agreed to provide electricity for another year until December at the same tariff.
Water and Power Minister Khawaja Asif told the meeting that United Nations’ sanctions had not affected the contract and the ministry intended to import 1,000MW in coming years.
Dar urged the ministries concerned to expedite payment of arrears to Tavanir by working with the Iranian side on the exchange of wheat and rice for the dues, said a handout issued by the Ministry of Finance.