Govt to clear dues from pension fund

Allows utilisation of $10m of hotel pensioners to clear liabilities

ISLAMABAD:

The government on Tuesday allowed the sinking Pakistan International Airlines (PIA) to temporarily use $10 million of Roosevelt Hotel pensioners to clear liabilities of the closed hotel in order to avoid penalties by the New York authorities.

The amount of $10 million has been provided amid skyrocketing losses incurred by PIA that reached Rs542 billion by June this year, the company’s first half-year (January-June) report of 2021 revealed.

The funds have been given to PIA-Investment Limited (PIA-IL) – a wholly owned subsidiary of PIA that runs Roosevelt Hotel Corporation. The Economic Coordination Committee (ECC) of the cabinet took the decision on Tuesday with Finance Minister Shaukat Tarin in the chair.

A finance ministry statement stated that the Aviation Division presented a summary requesting for provision of funds to meet the emergent liabilities of Roosevelt Hotel Corporation including payment of local taxes and utilities.

PIA-IL requested the ECC to allow utilisation of $10 million available with the National Bank of Pakistan to clear the immediate financial liabilities, it added.

If payment of local taxes and utilities was not made on time, the local authority would impose penalties on Roosevelt Hotel, which would create an awkward situation, warned the Aviation Division, which looks after the PIA affairs.

“After due deliberation, the ECC approved the summary with a direction to exercise due diligence in meeting the emergent liabilities and submit utilisation report, before the forum, regarding funding support by the government of Pakistan duly verified by the external auditors of the entity,” said the statement.

The pensioners’ money will be returned after NBP arranges $30.3 million in loan that the ECC has already approved. The government had approved another $30.3 million in June this year on PIA-IL’s request to meet the recurring as well as one-off payments as carrying over cost of the hotel. But NBP has not yet arranged the funds.

The committee also directed to engage a world-class consultant to meet the financial and operational challenges faced by the hotel. The PIA management is reluctant to engage the consultant despite repeated instructions given by the ECC in the past over one year.

The Pakistan Tehreek-e-Insaf (PTI) government has closed Roosevelt Hotel, New York, which is located in the heart of the city. Since September last year, the ECC has approved $172.3 million for meeting the Roosevelt Hotel obligations, of which $142 million has already been released.

In September last year, the government approved $142 million for meeting the financial obligations of Roosevelt Hotel including $18 million for pension-related liabilities of the hotel employees.

Of the $30.3 million, $18.3 million covers the recurring cost and $12 million is meant for one-off payments.

The ECC was informed that $18 million was still available with NBP as negotiations with the employees’ union were going on and would take some time.

The current government had promised to revive PIA but even after three years, the national flag carrier is heavily bleeding.

PIA’s net losses stood at Rs25 billion in the January-June 2021 period, resulting in accumulated losses of Rs541.6 billion, according to the first half yearly report of the airline.

As of June 2021, the current liabilities of PIA exceeded its current assets by Rs259 billion, it added.

“The management has made an assessment of the company’s ability to continue as a going concern,” the report said. “Based on the mitigating factors, the management believes that, though the sustainability of future operations of the company is dependent on the support of the government, no material uncertainty exists and going concern basis of accounting is appropriate.”

The ECC approved a supplementary grant in favour of the Election Commission of Pakistan (ECP), amounting to Rs215 million, for holding local government elections in cantonment boards, thereby, enabling the ECP to meet its constitutional obligations.

The ECP has planned to hold elections in 42 cantonment boards across the country, which will be held on September 12.

The ECC also accorded approval to a supplementary grant amounting to Rs50 billion for extending rupee cover to the financing by the Asian Development Bank (ADB) of $300 million for the procurement of Covid-19 vaccines and ancillary goods and services.

Published in The Express Tribune, September 1^st, 2021.

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