ISLAMABAD: The government on Wednesday allowed another bailout package for the troubled national airline and increased the quantity of wheat export to 1.3 million tonnes to reduce surpluses that may cause price crash.
The decision was taken at a meeting of the Economic Coordination Committee of the cabinet presided over by Finance Minister Ishaq Dar.
The ECC also approved payment of one-month salary to the employees of the Pakistan Steel Mills outstanding since October last year.
According to an official statement, the meeting approved a request for increasing the government’s guarantee limit for the Pakistan International Airlines Corporation Limited (PIACL) by Rs10.5 billion to Rs161.5bn to address its immediate challenges. It also constituted a committee headed by Planning and Development Minister Ahsan Iqbal to prepare yet another business plan to improve the airline.
According to informed sources, the airline’s management pleaded that its fiscal challenges had multiplied after a recent plane crash (PK-661), though it had been running with liquidity crisis for many years. Continuous money injections over the past three years, it said, had improved the number of PIA planes and efficiency, but revenue could not pick up due to a reverse challenge surplus capacity and low yields.
Urgent plane inspections after the recent crash not only further affected the operations but also the revenue flow, the management said, adding that non-payments to aircraft lessors, fuel suppliers and service at home and abroad had reached a stage where the airline might be forced to ground its fleet and cause international default such as to Saudi Arabia, Pakistan State Oil, Boeing, Air France, Bakri, Euro Control and spare parts and engineering service providers. Thus, it said, there was an urgent requirement of about Rs7bn to meet “overdue liabilities”.
On top of that, the PIA reported another requirement of Rs25bn to finance or roll over various loans guaranteed by the government before June 30 this year. For this all to achieve, the PIA management sought support of the government to increase its guarantee limit to Rs161.5bn from Rs151bn.
The ECC approved a proposal of the Ministry of National Food Security and Research (NFSR) to increase total exportable wheat quantities to 1.3m tonnes from 900,000 tonnes. Therefore, it also approved extension of time period for export of surplus wheat and its products till March 15.
Under the decision, the governments of Punjab and Sindh would be able to export additional quantities of 200,000 tonnes each to ease surplus wheat stocks, purportedly creating financial and storage constraints to the provincial governments that could lead to a price fall to the benefit of consumers but to the disadvantage of the growers.
The government had in July last year allowed export of 900,000 tonnes of wheat at $120 per tonne subsidy from public funds with a deadline of Nov 30. The two provinces failed to meet the deadline which was extended till Dec 31 with a permission to also export wheat products like suji, maida, etc, on the same subsidy rate.
On Wednesday, the ECC was informed that Punjab could export only 380,000 tonnes against a target of 600,000 tonnes and Sindh 240,000 tonnes against a target of 300,000 tonnes.
The NFSR ministry said the two provinces had now sought permission for increased exports in view of substantial stocks lying with the public sector. It said the current wheat stocks stood at about 7.8m tonnes which was much higher than the strategic stock requirement of 3.5-4m tonnes and supported the two provincial governments’ request for increasing the export quantities with extension in the deadline.
It was argued that additional exports were necessary to enable the provincial governments to free up storage space and liquidity to cater for 2016-17 wheat crop growing due in April-May.
The ECC approved additional export of 400,000 tonnes of wheat and its products, with a permission to also clear backlog on the same condition i.e. subsidy of $120 per tonne.
It decided to allow export of wheat and its products till March 15, with a directive to complete the process by May 31.
Courtesy : Dawn News