$200m equity share for Tapi project approved

ECC gives PIA 4.4 billion

ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet on Friday approved $200 million equity share of Pakistan in the Tapi Gas Pipeline Project Company and provision of guarantee support of Rs4.4 billion to raise loan for PIA for improving its products and services.

The ECC in its meeting chaired by Finance Minister Senator Ishaq Dar on Friday approved financial support for PIA before selling out 26 percent share of the national flag carrier within the ongoing financial year. The PIA is struggling for improving its services on long routes which are commercially viable.

A top official of Finance Ministry told The News after the ECC meeting that the government raised guarantee support for PIA for raising loan from the commercial banks in order to provide financial support aiming at improving its products and services.

The government had already promulgated an ordinance to make this entity as company which will pave the way for selling of 26 percent shares along with management control to potential buyer of the PIA.

The government is all set to privatise PIA during the current fiscal year despite stiff resistance demonstrated by the mainstream political parties mainly by the PPP.

On a proposal submitted by Aviation Division, the ECC granted approval for a guarantee support of Rs4.4 billion for PIA enabling the airline to improve its products and services. The ECC also endorsed Finance Division’s agreement to Aviation Divisions’ request to enhance the present guarantee limit from Rs141.0 billion to Rs146.0 billion.

However, according to press statement issued by Finance Ministry after the ECC meeting that on a proposal from the Ministry of Petroleum and Natural Resources accorded approval of $200 million equity share of Pakistan in the TAPI Gas Pipeline Project Company.

The ECC also accorded approval for release of $12 million out of this share for the Pre-FID activities in four equal tranches starting from January 2016 as per the disbursement plan. Approval for draft shareholders agreement, investment agreements and authorisation for ISGS to sign these agreements was also given by the ECC.

It may be mentioned here that overall cost of Tapi project is $10 billion. Turkeministan, being the Consortium leader for the project, has agreed to contribute 85% of the equity.

The ECC also approved proposal by Privatisation Division for payment of two months salaries (Rs. 64 million) to the employees of Pakistan Machine Tool Factory (PMTF) Karachi.