The Economic Coordination Committee (ECC) of the Cabinet, chaired by Federal Minister for Finance Shaukat Tarin, has approved a restructuring plan for Pakistan International Airlines (PIA). The restructuring plan includes providing a monthly bailout package of PKR 22.9 billion to PIA until the finalization of the plan.
Additionally, the ECC has rejected the demand of the Federal Board of Revenue (FBR) to include a mandatory PKR 1.3 billion monthly payment and interest on loans in the bailout package. However, the ECC has approved a supplementary grant of PKR 40 billion for defense projects, which will be utilized for subsidies and other expenses.
During the meeting, the Secretary of Aviation briefed the ECC on matters related to PIA, emphasizing the need for financial support and the restructuring of the organization. It was decided that a separate committee would be formed to review the restructuring of PIA comprehensively.
Furthermore, it was recommended that the PKR 1.3 billion, which the FBR had demanded to be included in the bailout package, should be transferred to PIA in the form of an allocation in the budget. Additionally, PKR 70 crore should be given to PIA monthly to cover its operational expenses.
The Finance Division and State Bank of Pakistan will support PIA’s financial challenges, ensuring a strong and comprehensive restructuring plan is developed and finalized. The committee aims to provide assurances regarding the plan’s viability and effectiveness.
In another development, the ECC decided to increase the margin on petroleum products for dealers. The margin for high-speed diesel (HSD) and motor spirit (MS) for dealers will be increased by a total of PKR 1.64 per liter, with an initial PKR 0.41 per liter increase effective from September 15, 2023. The ECC has directed to establish a systematic approach for determining margins and recommended conducting a cost analysis for OMCs (Oil Marketing Companies).
Lastly, the ECC approved a technical supplementary grant of PKR 40 billion for defense services projects. This grant will be utilized for subsidies and other expenses related to defense projects. It is specified that the amount will not be disbursed in a lump sum but will be released on a case-by-case basis.
These decisions highlight the government’s efforts to address the financial challenges faced by PIA, implement necessary reforms, and manage the margins for petroleum product dealers while allocating funds for defense projects in a structured manner.