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Thursday March 28, 2024

PIA incurred Rs360 billion loss by end of 2017, SC told

By Sohail Khan
October 03, 2018

ISLAMABAD: Owing to absence of professional and experienced leadership, the national flag carrier (PIA) incurred a loss of Rs360 billion by the end of 2017.

As per the audited financial statements of Pakistan International Airlines (PIA), the accumulated losses as on December 31, 2008 were Rs72.353 billion, which amounted to Rs360.117 billion as on December 31, 2017, says the Auditor General of Pakistan in its report submitted before the Supreme Court on Tuesday. On June 30, the Supreme Court had directed the Auditor General to conduct a special audit of the PIA for the last 10 years (2008-2017) as per approved terms of reference (ToRs) and furnish a comprehensive report before it.

A two-member bench of the apex court, headed by Chief Justice Saqib Nisar, while hearing a suo motu case relating to privatisation and losses of PIA had ruled that the primary objective of the special audit was to ascertain the causes of accumulated losses sustained by the PIA over the period of last 10 years.

In its findings, the audit report observed that the PIA has been run like a non-business entity, governed by the non-professional board of directors (BoDs), managed by CEO lacking industry-specific experience. It further observed absence of prudence, due diligence and best industry practice in policymaking, ad-hocism in decision making as well as poor HR, procurement, marketing contacts, fleet, fuel, inventory and financial management.

The Auditor General recommended constitution of an efficient and dynamic BoD to turnaround the airline, besides appointing chief executive and MDs on merit. The AGP further recommended that unnecessary interference from the government should be stopped besides interference of various staff/officers associations. The audit further recommended that the national aviation policy, ASAs with Gulf and Turkish Airlines be reviewed on the basis of bilateral commercial interests.

The audit report further observed that so far 44 members of the BoD of the PIA were nominated by the government during 2008-17, but none of them had relevant experience in aviation industry. It added that majority of the members were serving/retired civil/military bureaucrats, politicians and businessmen. “Due to lack of relevant experience, the successive BoDs neither efficiently formulated any strategic business plans/policies, nor effectively executed the best practice of the airline industry,” says he audit report.

It further found violation of the prevailing rules/regulations in appointment of MDs, CEOs, granting them exorbitant pay and allowances in violation of standing instructions of Ministry of Finance causing extra burden of Rs98.111 million in the corporation. Similarly, appointment of DMDs, chief executive, directors in the corporation were also not transparent and serious irregularities, including fixing of pay and allowance on personal liking and disliking, were pointed out in the audit report.

Thus, appointments on key managerial positions without observing the principle of right person at right place created efficiency issues leading towards mismanagement and ineffectiveness in decision making and its execution.

The audit report also threw light on the HR department and termed it pathetic, having no uniform merit based policy for appointment, promotions and postings, adding that foreign postings were made on favouritism/nepotism without observing merit, resultantly the sales targets were compromised.