Govt approves over Rs4.5 billion for PIA Holding Company liabilities after privatisation

The federal government has approved more than Rs4.5 billion to meet funding requirements related to claims and carved-out liabilities of PIA Holding Company Limited (PIAHCL) following recommendations submitted by the Ministry of Defence, Business Recorder reported. 

The matter was discussed during a meeting of the Economic Coordination Committee (ECC) on April 27, 2026, where the Ministry of Defence briefed members on financial requirements linked to liabilities transferred from Pakistan International Airlines Corporation Limited (PIACL).

According to the briefing, PIAHCL was established on May 3, 2024, under Section 282(3) of the Companies Act, 2017, to take over non-core assets and liabilities of PIACL to facilitate the airline’s privatisation process.

The ECC was informed that the Securities and Exchange Commission of Pakistan had approved the scheme of arrangement covering the transfer of liabilities, including loan mark-up, foreign exchange cover, pension obligations and medical liabilities of PIACL employees.

Officials told the committee that following the privatisation of PIACL through a Rs135 billion bid for a 75% stake, transaction documents, including the Share Purchase and Subscription Agreement and Shareholders’ Agreement, were approved by the federal cabinet on December 31, 2025, and signed on January 29, 2026.

Under the agreement, PIACL is required to maintain positive net equity as a condition for completion of the divestment process, which depends on the timely recovery of receivables from PIAHCL to avoid audit observations related to Expected Credit Loss.

The Ministry of Defence stated that PIAHCL currently lacks sufficient cash flows and depends on federal government support to meet its liabilities.

Officials informed the ECC that the federal cabinet had earlier approved budgetary support for PIAHCL on December 9, 2025, subject to independent validation of claims.

Following a financial audit review, PIAHCL submitted a reconciled and board-approved funding request amounting to Rs5.984 billion.

The requested amount included Rs1.134 billion payable to National Insurance Company Limited, Rs4.149 billion for reimbursement of medical and pension payments made by PIACL, Rs246 million for reimbursement of adjusted pension payments made by PIAHCL between October 2025 and January 2026 and salary payments for employees of Precision Engineering Complex.

According to the briefing, the Finance Division approved the release of Rs4.15 billion for medical and pension liabilities along with Rs456 million for salaries of Precision Engineering Complex employees through Technical Supplementary Grants from available savings.

Regarding the Rs1.134 billion payment linked to NICL, the Finance Division proposed settlement through an adjustment or refund mechanism instead of direct budgetary support.

However, the Federal Board of Revenue informed the ECC that PIACL’s refund claim against the NICL payment was not considered tenable.