In a strategic move to reclaim outstanding receivables amounting to Rs 21.7 billion from Pakistan International Airlines (PIA), Pakistan State Oil (PSO) has proposed the introduction of a levy of up to Rs4 per litre on Jet-A1 fuel.
This proposal comes in the backdrop of PIA’s inclusion in the Active Privatization Programme by the Federal Cabinet on August 9, 2023, aimed at reviving the national carrier.
As of January 31, 2024, PSO’s receivables from PIA include a principal amount of Rs 15.8 billion, alongside late payment surcharges (LPS) totaling Rs 11.9 billion.
Under the PIA revival plan, a new holding company will be registered with the SECP, which will absorb all assets and liabilities of PIA, subsequently restructuring PIA as a debt-free entity within this new framework.
However, PSO has expressed reservations regarding the parking of its receivables in the proposed holding company, citing concerns over the impact on its financial health and operations as a publicly listed entity.
In response to an inquiry from the DG Privatisation Commission dated January 30, 2024, PSO outlined its position, advocating for direct recovery methods including cash payments, Pakistan Investment Bonds (PIBs), an equity share in the newly formed company, or asset transfers as preferable alternatives.
Amir Hayat, MD and CEO of PSO, highlighted the suggestion of implementing a Rs3 to 4 levy on Jet-A1 fuel as a viable option for recovering the dues, a proposal that has gained unanimous support from the Board of Management (BOM).
The BOM has firmly rejected the idea of incorporating PSO’s receivables into the holding company, emphasizing the need for a settlement that safeguards PSO’s financial interests.
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