PSO resumes fuel supply to 20 PIA flights amidst ongoing financial woes

Pakistan State Oil (PSO) has restored fuel supply to a total of 20 Pakistan International Airlines (PIA) flights, bound for both local and international destinations, following a substantial payment of Rs 84 million by the national carrier. This move comes in the midst of an ongoing financial crisis for PIA, which has been grappling with unpaid dues amounting to hundreds of billions of rupees.

A PIA spokesperson confirmed to the media that due to the suspension of the fuel supply to the airline 77 flights were canceled. The spokesperson noted that 52 international and 29 domestic flights were scheduled on Sunday, of which only 4 flights departed. It added that the PIA administration was in constant touch with the Pakistan State Oil (PSO) as payments could not be made due to bank closure on Sunday.

On Monday, PIA managed to settle its outstanding bills to PSO in two installments. The first payment, amounting to Rs59 million, was promptly made, followed by a second payment of Rs25 million later the same day. After accounting for the weekend deficit, PIA had Rs35.8 million available for its Monday flights.

A spokesperson for PSO disclosed that they had received a total of Rs220 million from PIA for refueling services provided on Saturday and Sunday. PIA had furnished a list of 39 flights scheduled for October 21, 2023, which had been temporarily halted due to unpaid dues.

According to the terms of their agreement, from October 16 to 23, PIA was expected to make daily payments of Rs 920 million against the fuel supplies provided by PSO. Pakistan State Oil, which has set a credit limit for PIA at Rs15 billion, revealed that the airline’s current credit exposure stood at Rs14.95 billion, with a cushion of Rs50 million available. Meanwhile, the payables against the ongoing supplies amounted to Rs2.05 billion.

The outstanding amount owed by PIA to PSO as of October 16, 2023, was disclosed to be a staggering Rs26.825 billion. This sum comprised Rs14.893 billion as the principal amount and Rs11.932 billion as late payment surcharges (LPS). As of October 17, the payable amount against current supplies was reported to be Rs2,072 million.
The resumption of fuel supply to PIA aircraft was initiated after PSO received an advance payment of Rs220 million from the airline, which had been suspended on October 21, 2023, due to the mounting dues.

PIA’s financial woes have prompted the Pakistani government, which is actively pursuing the privatization of the national carrier, to deny the airline’s request for Rs23 billion in operational support. Instead, the caretaker prime minister Anwaar-ul-Haq Kakar has instigated a restructuring plan aimed at stabilizing PIA’s financial standing.

In a recent review meeting focused on the financial situation and privatization of PIA, Prime Minister Kakar stressed the urgency of finalizing the privatization process within the stipulated time frame. He has requested regular compliance reports to be submitted to him to ensure the success of these efforts.