Business

Govt trying to find Rs8bn loan guarantees for PIA

Published

12 months ago

Farwa

After flight cancellation, PIA is now announcing only those flights for which fuel has been procured.

PIA has 34 aircraft in fleet, out of which two are inoperative.
PIA’s revenue has declined to Rs300m.
Airline spox says 15 int’l flights, 7 domestic flights to depart today.

ISLAMABAD: As Pakistan International Airlines (PIA) suffers from 70% decline in revenue after the cancellation of over 600 flights, the Finance Minister has been scrambling to get Rs8 billion loan guarantees to remain within the International Monetary Fund’s (IMF) agreed limits, The News reported quoting sources.

According to the sources, the national carrier experienced a huge decline — around 60% to 70% — in its daily revenue. The airline generated around Rs700 million Rs800 million, which has now reduced to Rs300 million.

There are 34 aircraft in PIA’s fleet, out of which two planes are inoperative because of different reasons. Meanwhile, the airline also doesn’t have the finances to meet its fuel requirements. Following flight cancellation, the national air carrier is now announcing only those flights for which fuel has been procured, as it will ensure operation without any delay.

Last week, the ECC had approved a bridge financing of Rs8 billion through CAA resources that would be used for payment of $25 million liabilities owed to Malaysia for procurement of two aircraft. There was an outstanding amount of $30 million but after tough negotiations, PIA convinced them over payment of $25 million.

PIA had sought Rs24.6 billion for its operational expenses from the government of Pakistan. The Ministry of Finance had initially rejected the demand for this injection on the basis that in the past, PIA came up with financial injections with the commitment to undertake restructuring plan but it was never implemented.

The Privatisation Commission is making all-out efforts to accomplish all required procedures for going ahead with privatisation till December or January. It is yet to be seen how speedily they would be able to accomplish all the spadework and procedures without compromising the objective of transparency.

It would be an uphill task to accomplish the PIA transaction but also keep its operation intact. If it reaches to point of shutdown in its existing shape, its privatisation will not produce the desired results.

The Ministry of Finance has been working on creating a fiscal space and would provide its nod in the shape of guarantees for generating loans of Rs8 billion.

“We might be able to jack up all financial injections up to Rs15 billion but it’s too early to share precise numbers,” said one official, adding that the outcome of the ongoing exercise would be determined this week. The total guarantee limit for PIA stood at Rs262 billion, which was exhausted but later on the airline paid back its outstanding loans. So there was room available to the tune of Rs8 billion at the moment.

There is no easy solution for cash-bleeding PIA in sight but it should be privatised in a manner that it remains afloat for the next three to six months.

PIA to operate 22 flights today

Meanwhile, the PIA spokesperson said that the airline will operate 22 domestic and international flights today. However, 29 flights have also been cancelled today due to the overall situation.

Speaking with Geo News, the spokesperson said that 15 international flights and seven domestic flights will depart today.

“PIA’s flight operations are improving,” the spokesperson said.

Business

Gold prices in Pakistan approach an all-time high.

Published

22 hours ago

Farwa

Following a substantial surge the prior day, gold prices in Pakistan are ascending to unprecedented levels with an additional gain on Thursday, coinciding with a rise in global precious metal rates.

The price of 24-karat gold in the local market rose by Rs700 per tola, reaching Rs277,900, as reported by the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA).

Likewise, the cost of 10 grams of 24-karat gold increased by Rs600, currently priced at Rs238,254.

Globally, gold prices exhibited an upward trend, increasing by $7 throughout the day. The APGJSA reports that the international gold price was $2,682 per ounce.

Notwithstanding the increase in gold prices, the silver market exhibited stability, with the price of silver maintained at Rs3,050 per tola.

In the previous month, gold prices in Pakistan reached an unprecedented high of Rs 277,000 a tola, driven by substantial gains in the worldwide market.

Business

World Bank: Power industry subsidies soar by 400% in just five years.

Published

22 hours ago

Farwa

Ninety-four percent of domestic customers will benefit from the budgetary subsidy in 2024, according to a World Bank report, which credits the increase in protected consumers with contributing to the weight of subsidies.

In the current fiscal year, the electricity sector subsidy has increased by an astounding Rs. 954 billion, from Rs. 236 billion in the 2020 fiscal year to Rs. 1190 billion.

Notwithstanding changes, the circular debt has averaged Rs. 400 billion yearly over the last four years due to the incapacity to minimize losses and inadequate recovery of electricity payments.

According to the World Bank, the government must solve the fundamental problems in the power industry in order to lower the burden of subsidies and circular debt, as rising electricity prices and inadequate tax collection will only serve to worsen the circular debt crisis.

The rise in Pakistan’s power sector circular debt has raised worries from the World Bank (WB) despite an unprecedented increase in energy pricing.

Within the last six years, the debt has grown by 1241 billion rupees, according to the World Bank’s study. Between 2019 and 2021, the debt climbed by 1128 billion rupees.

The electricity sector’s circular debt has been increasing at an alarming rate, according to a World Bank analysis. Between 2022 and 2024, there was a substantial increase of 113 billion rupees.

Pakistan’s electricity industry has 2393 billion rupees in total circular debt as of 2024.

Restructuring is required to solve the circular debt issue, according to the World Bank.

Business

Final settlement: Govt to pay five IPPs Rs 72 billion.

Published

23 hours ago

Farwa

On October 10, Prime Minister (PM) Shehbaz Sharif declared that the agreements with five IPPS would be terminated in the first phase. Sources claim that the government will give Rs 15.5 billion to Rousch Power and Rs 36.5 billion to Hubco.

In a same vein, the federal government would pay Lalpir Power Rs 12.8 billion, Atlas Power Rs 15.5 billion, and Sapphire Power Rs 6 billion.

The sources state that late payment fees are not included in the settlement. With effect from October 1, the agreements with the five IPPs will be considered officially ended.

PM Shehbaz earlier remarked that the termination was carried out with the owners of the IPPs’ mutual permission while presiding over the federal cabinet meeting in Islamabad.

The Prime Minister notified the Cabinet that the only money that will be paid, interest-free, to these IPPs is the outstanding balance.

According to him, the national exchequer will gain over 411 billion rupees from the termination of these contracts, while power customers will save roughly sixty billion rupees.

According to Prime Minister Shehbaz Sharif, it was the result of the arduous teamwork of the entire government. In this regard, he also acknowledged the contributions and assistance of the associated parties. He specifically mentioned General Asim Munir, the Chief of Army Staff, who showed a personal interest in the situation.

The prime minister characterized the development as the start of a trip that will ultimately lead to the advancement and prosperity of the populace.

PM Shehbaz Sharif also brought up the assistance that the Punjabi and Federal governments gave to power users over the summer.