The Public Accounts Committee (PAC) raised serious concerns over the Pakistan International Airlines Corporation Limited’s (PIACL) Rs 650 billion debt, referring to it as a “black hole” and questioning the Finance Division’s inability to devise a viable repayment strategy. The committee, chaired by Syed Naveed Qamar, reviewed the Audit Reports of the Ministry of Defence (Aviation Division) for 2023-24.
According to media reports, Lieutenant General Muhammad Ali (retired) briefed the committee on audit objections, revealing that many liabilities highlighted in various reports had been transferred to PIA Holding Company Limited. However, the Finance Division has yet to decide how to address these liabilities, leaving the issue unresolved.
AVM Muhammad Amir Hayat, CEO of PIA, informed the committee that the Finance Division has not reached any conclusion regarding the liabilities held by PIA Holding Company Limited. In response, the PAC Chairman described these liabilities as a “black hole.”
The audit report highlighted a significant issue with PIA’s non-payment of taxes and duties, including federal excise duties and advance taxes collected from passengers, which were not deposited into the government treasury within the required 45-day period, as per the Federal Excise Duty Act of 2005. The delay in payment raised PIA’s obligations and negatively impacted its liquidity position.
The Ministry of Defence responded that out of the total liabilities of Rs 131.5 billion, Rs 115 billion had already been transferred to the Holding Company under the Scheme of Arrangement, with Rs 9 billion still pending due to legal cases. The committee has directed PIA management to recover Rs 5 billion in outstanding liabilities.
The PAC was also informed of two disputed properties, the football ground in KDA Scheme-I, Karachi, and SambaraInn Hotel in Larkana, that have been transferred to PIA Holding Company as part of the ongoing asset management process.
Additionally, audit officials revealed that PIA incurred a loss of Rs 22 billion due to prolonged aircraft groundings, with one aircraft being grounded for a staggering 652 days. These delays, caused by management negligence, resulted in operational and financial losses amounting to Rs 21.82 billion. Furthermore, PIA faced losses of Rs 8.6 billion due to failure to dispose of spare parts and retired aircraft.
The audit also pointed out that PIA failed to implement board directives regarding properties, causing a loss of Rs 2.61 billion, and incurred Rs 1.669 billion in irregular payments made without validation. Additionally, Rs 0.112 billion was lost due to the irregular procurement of stores and spares, violating Public Procurement Regulatory Authority (PPRA) rules.
In response to these audit findings, the Ministry of Defence explained that the aircraft groundings were a result of restrictions following the COVID-19 pandemic, coupled with global supply chain disruptions and financial constraints that hindered timely maintenance and repairs. The delays were attributed to unscheduled structural repairs, which required additional materials and time to complete.
