In a meeting held on December 30, 2017 under the chairmanship of the former Prime Minister, it was decided that mark up on the debt of PIACL would be picked up by GoP for five years and its payment would be made directly to the lenders. In pursuance of the decision of December 30, 2017 an amount of Rs 18 billion was allocated during the Financial Year 2018-19 paid directly to the lenders by the Finance Division.
PIACL has requested for GoP cash support for the following purposes: (i) owing to volatility in Monetary Policy rate and dollar rupee parity, the amount has increased from Rs 18 billion to Rs 19.628 billion. The difference of Rs 1.628 billion is required to pay mark up during FY 2018-19; (ii) budget estimates of Rs 24.524 billion for FY 2019-20 were also shared with Ministry of Finance, on the basis of these assumptions (Kibor 10.69 per cent and dollar to rupee 140). The demand for the year 2019-20 of Rs 24.524 billion has now been revised upward to Rs 30.071 billion due to recent drastic change in monetary policy and dollar to rupee parity; and (iii) GoP cash support of Rs 9.779 billion is required to meet expenditure on account of VSS. After this provision, the process of VSS can start which will result in saving of Rs 5.057 billion per annum.
Meanwhile, PIACL has also argued that in order to improve the passenger travel experience, a cost effective in-flight entertainment (IFE) be made available for this purpose. PIACL has embarked upon a program to indigenously develop the IFE system which will not only save substantial cost for PIACL but will also save precious foreign exchange. The cost of this project, initially estimated at Rs 485 million, has now been increased for the following reasons: (a) when the project was initiated in November 2018, the estimated cost Rs 485 million for Boeing 777 aircraft was based on $ 1= Rs 132.50; (b) in May 2019, with 14 per cent increase $ 1= 151.00, the funding requirement was raised to Rs 553 million; and (c) PIACL has therefore requested for Rs 600 million which will have cushion to adjust further fluctuation in $-rupee parity.
