14 PIA flights cancelled due to lack of fuel

PSO suspends fuel supply to national airline over unpaid dues

Our Correspondent October 17, 2023


Pakistan State Oil (PSO) has stopped the fuel supply to Pakistan International Airlines (PIA) at Multan, Sukkur, and Gilgit airports due to unpaid dues, exacerbating the precarious situation of the national flag carrier.

This suspension of fuel supply on Monday led to the cancellation of 14 flights between Multan, Karachi, Sukkur, Islamabad, and Gilgit. According to sources, PIA owes PSO an amount of Rs650 million according to the agreed schedule.

As reported by The Express Tribune on Sunday, PIA has sought additional borrowing of over Rs7 billion from banks due to concerns about the potential partial or complete suspension of its flight operations resulting from a severe financial crisis.

According to the report, PIA wrote to the Aviation Division, requesting an immediate loan of over Rs7 billion from banks. The letter also noted that the government of Pakistan's guarantee includes the option for the airline to secure a loan of Rs7.5 billion.

Interestingly, no bank has shown interest in providing a loan to the airline.

Read A debt-free PIA to go under the hammer

The letter also pointed out that due to financial difficulties, fuel supply in Jeddah and Dubai had been halted, and the state-owned oil marketing company PSO had refused to supply fuel to the airline.

It also mentioned the possibility of the International Air Transport Association (IATA) suspending its membership at any time, and the Federal Board of Revenue (FBR) had issued notices to the airline.

The letter, sent by the General Manager Funds Management to the Deputy Director Division, urged the Ministry of Finance to intervene immediately and instruct banks to provide a loan of Rs7.5 billion under the government's guarantee.

Last month, on September 22, the caretaker privatization minister had announced that the government would not ground PIA, despite it being the most loss-making enterprise, and that no employees would be laid off, even after privatization.

These statements came shortly after interim Finance Minister Dr Shamshad Akhtar had expressed the government's commitment to providing support to keep PIA operational.

According to a report, these two separate statements seemed to be aimed at appeasing lobbies working to save the airline, despite its severe financial crisis.

"The prime minister has instructed me that PIA would not be grounded. We have already worked out a way to keep PIA flying," said Minister for Privatization Fawad Hassan Fawad in response to a question during a press conference.

Previously, PIA had requested a moratorium on repaying its domestic debt to bridge an annual deficit of Rs153 billion between its sales and essential expenses.

PIA management and the Ministry of Finance had been in discussions regarding restructuring the airline's domestic debt of about Rs260 billion, owed to nine commercial banks. Fawad had stated that he was reviewing a plan shared by PIA and had not yet made a decision.

PIA's plan involves debt restructuring, withholding tax payments to the FBR, not paying fees and charges to the Civil Aviation Authority (CAA), and not making any improvements to its administrative affairs.

"We will have to support PIA, as the government holds a 92% stake in the airline," Dr Shamshad Akhtar said on the same day during a separate press conference.

"If necessary, the government will also restructure PIA's debt, but the final decision will be made by the privatization minister," she added.


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