ECC rejects PIA’s financial demands till finalisation of restructuring plan

ISLAMABAD: The Economic Coordination Committee of the Cabinet (ECC) on Wednesday rejected the PIA’s demand for provision of Rs22.9 billion and deferment of Rs1.3 billion per month to the FBR as well as loans and markup amount till finalization of restructuring plan. It, however, allowed increasing the petroleum dealers and OMC margins from Sept 15 in four fortnightly instalments.

The Caretaker Federal Minister for Finance, Revenue, Economic Affairs and Privatization, Dr Shamshad Akhtar, chaired the meeting of the Economic Coordination Committee (ECC) of the Cabinet on Thursday. The Ministry of Finance issued a press release late at night around 11.30 pm, which did not say anything about the PIA request from the Ministry of Finance to issue a carry-over amount of Rs22.9 billion for the last financial year 2022-23, which could not be released.

During the meeting, the Ministry of Aviation submitted a summary on “Financial support for PIACL & its Restructuring”. The secretary of Aviation gave a detailed briefing to the chair about the financial burdens, liabilities of PIA and the need for restructuring the organization.

The ECC discussed and reviewed the timelines and costs of the restructuring plan. After detailed discussion and deliberation, it was decided to constitute a separate committee for the assessment of restructuring plan of PIA.

The ECC also rejected the request for deferment of the payments of Rs1.3 billion per month, which PIA pays to FBR against FED and Rs0.7 billion per month which PIA pays to CAA against embarking charges.

It was also decided that the Finance Division and State Bank of Pakistan will support PIA in tackling its financial challenges after a concrete plan for restructuring the airlines had been finalized and submitted to the satisfaction of the committee.

In a related development, the ECC allowed an increase in the petroleum dealers and OMC margins from Sept 15 in four fortnightly instalments after the summary of the Ministry of Energy (Petroleum Division) to that effect was submitted.

The ECC decided to enhance the petroleum dealers’ margins on MS & HSD by Rs1.64/litre in four fortnightly instalments of Rs0.41/litre w.e.f. from September 15. Similarly, the OMCs margin on MS & HSD was decided to be enhanced by Rs1.87/litre in four fortnightly instalments of Rs0.47/litre w.e.f September 15, 2023. After a detailed discussion, the ECC decided that in order to ensure efficiency and timelines, these margins shall be determined by OGRA on the basis of a systematic mechanism to be developed by OGRA after considering PSO’s operating cost for OMC and dealers.

The ECC approved a Technical Supplementary Grant of Rs40 billion against various approved projects of defence services and for subsidies and miscellaneous expenditures during FY2023-24. However, the amount will not be released at once, but on case to case basis only as it has already been budgeted for the current fiscal.