PSO seeks govt permission to immediately stop fuel supply to PIA
36
ISLAMABAD: With outstanding arrears against Pakistan International Airlines (PIA) piling up over Rs11billion, Pakistan State Oil has sought permission from the federal government to “immediately discontinue fuel supplies to the national flag carrier.
A letter to the Ministry of Petroleum and Natural Resources – a copy of which is available with DawnNews – disclosed on Saturday that PSO has sought permission to immediately discontinue fuel supplies to PIA.
Though arrears against PIA have built up to over Rs11bn, state-owned oil company PSO has been continuing fuel supply to PIA in compliance with directives of the petroleum ministry.
PSO has also informed the government in detail regarding the default on due payments by PIA.
The oil company in its letter further says that in view of its liquidity position, it has become hard for PSO to continue supplies unless outstanding receivables are paid by PIA.
Several meetings have been held with PIA management to resolve the issue, including a meeting between senior management of PIA and PSO on Sept 15 at PIA’s offices followed by a meeting on Sept 25 at the PSO head office, states the letter.
“During these meetings, PIA expressed its inability to pay the outstanding dues because of its ongoing cash flow problems. PSO also pursued the matter through MPNR (Petroleum Ministry) but the situation could not improve despite the ministry’s support. In process of pursuing the recovery, PSO management learnt that PIA has discontinued its receivables from profitable routes from the banks and any further credit facility is not an option for PIA for settlement of PSO dues,” it says.
The letter also claims that under these circumstances, PSO is left with no option but to immediately discontinue the fuel supplies to PIA.
“In view of the standing instructions of the government for continuation of fuel supply to PIA despite payment default and considering the situation outlined above with respect to PIA’s inability to pay and PSO’s inability to arrange further supplies, your permission is solicited for PSO to discontinue supply of fuel to PIA,” reads the letter.
When contacted, PSO spokesman, Mariam Shah, declined to comment on the matter.
PIA officials were also unavailable for comment regarding the matter.
Read more
On DawnNews
Comments (36) Closed
Oct 25, 2014 08:20pm
Purge PIA of all unnecessary politically appointed employees and PIA will become profitable again.
Recommend
0
Oct 25, 2014 08:26pm
Permission granted
Shaheen has better biryani to offer
Recommend
0
Oct 25, 2014 08:32pm
More drain on national exchequer. What happened to privatising of PIA.
Recommend
0
Oct 25, 2014 08:45pm
What a shame. I am sure the petrol money is going in somebody's pocket instead. PIA is being systematically drowned so that the big sharks of Pakistan could either take over or form their own airlines to eat it up. I am sure there are no politically appointed employees in Indus airlines or others as these airlines are their own.
Recommend
0
Oct 25, 2014 09:31pm
Just a reminder for our PTI devotees: Imran opposes the privatisation of PIA. PTI along with PPP first to denounce privatisation initiative.
Recommend
0
Oct 25, 2014 09:35pm
I don't think it is that easy to get rid of those politically appointmented employees. Each on of those employees is likely to have paid good money to get their jobs and where you have thousands, any political party would find it difficult to enforce redundancies...especially now, when PMLN needs the support other parties.
Recommend
0
Oct 25, 2014 10:01pm
Who cares if PIA flies. Please join and support the Million March For Kashmir in London and Brussels very shortly. Pakistan Air Force will charter special planes for you
Recommend
0
Oct 25, 2014 10:10pm
PIA should be privatized. The concept of national carrier went out with the fall of the Soviet Union. US does not have a national flag carrier. All airlines here are private.
But removing employees may not have as big an impact as people think. In Pakistan payrolls account for less than 40% of the expenses. So cuts will need to be made elsewhere.
Recommend
0
Oct 25, 2014 10:11pm
@khan it's not going anywhere. And any one buying PIA will have to acquire the debt.
Recommend
0
Oct 25, 2014 10:16pm
Is there anything in Pakistan that I as a Muslim Muhajir can be proud of. I dont live in Karachi - my father's city or Pakistan but in my country where I reside since birth I am always associated with Pakistan. This country is a failure, the businesses are crippling. the politicians are corrupt. The only thing that I can be proud of as a forced Pakistani national is the poor rich girl Mallala who too was once a Pakistani.
Recommend
0
Oct 25, 2014 10:20pm
Sell or close down PIA........no other option left.
Recommend
0
Oct 25, 2014 10:28pm
Circular debt issues is very easy to understand...government owned company A borrows money on "interest" to be able provide services to company B with promise to pay at a certain date...company B could not keep promise because of lack of funds and defaults on scheduled payment...reason for company B's precarious financial position are plenty such as; outstanding payments from company C or retail consumers, leakage or wastage, theft by consumers or by its own employees, etc. etc. ...overall "Circular debt" can truly be called "Vicious Circle" of gross mismanagement, incompetence, corruption, favoritism, negligence...now imagine each company i.e. A, B and C are plagued with similar issues...because they are each other’s suppliers as well as customers...so the 10 million dollars borrowed by company A from a bank after 5 years would become 16 million dollars approx. due to interest compounding and retail consumer defaults adds to more misery...hope it makes sense to general public...
Recommend
0
Oct 26, 2014 12:17am
Once one of the worlds best airlines and now look at it - pathetic! - Thanks Zia Ul Haq and every politicial leader and dictator after him!
Recommend
0
Oct 26, 2014 12:40am
Really good idea, just stop feeding PIA - an overburdened airline which was killed by our shortsighted politician by ground staff of PIA,mostly politically employed.
Just get rid of all non essential staff.
Recommend
0
Oct 26, 2014 12:43am
@Haider Rehman
I agree with you, There is no reason why P.I.A should not make profit every year and create regular jobs for the peoples of pakistan
college level education with strong aerospace training of approx three to four years , there is no need for higher education .
you will see a major up lift in performance and profit all over.
m.mirza
montreal
Recommend
0
Oct 26, 2014 12:46am
And this my famous Pakistani Airline.
Recommend
0
Oct 26, 2014 01:10am
While it will be sad to see PIA being broken up and sold off as , i think the time has come to sell it off. Imho , no point throwing money into an endless pit.
It would also be nice if the Pak gov uses that money and funds a couple of power plants , ramps up production and get the exports growing.
It would also be great if more is spent on the infrastructure roads , trains etc. Also reduce the import tax on Vehicles.This will help with driving the price on new and old cars. More Cars on the road more jobs in anything connected to the car industry.
Recommend
0
Oct 26, 2014 01:25am
PIA is a huge government owned institution where politicians give jobs to oblige people / political appointees. That's why Zardari and even PMLN will never privatize it. It's become a huge burden to Pakistan economy ---
Severely overstaffed.
Incompetent / lazy / full of safaarshis ---
Either privatize it or sell it --
Or just get rid of it --- it will save money to Pakistan.
What will happen to people's jobs ?-- well -- once privatized - employees will have to work -- tough s___ like everybody else. And safaarshis will be kicked out -- so what ! Enough of free money at the expense of tax payers.
Recommend
0
Oct 26, 2014 01:43am
PIA has not made any profit for two decades now. Hierarchy has failed to understand airline operations to steer it in a viable direction. Put someone in charge that can turn it around or bury the dying airline.
Recommend
0
Oct 26, 2014 02:03am
Would all note that PIA somehow manages to pay for fuel at all non-Pakistani airports, otherwise the planes would never make it back from distant locations!
Recommend
0
Oct 26, 2014 02:27am
Why do they have to ask permission? People or businesses that do not pay their bills don't get service - it's not rocket science - and the fact that a business is owned by the govt isn't an excuse for being a dead beat.
Recommend
0
Oct 26, 2014 03:00am
No wonder we beleive in Allah. Only Allah is running this country. This is tragically hilarious.
Recommend
0
Oct 26, 2014 05:07am
if aam admi fails to pay one month bill, his services are cut, and here we have PIA, 11billion and still walking tall like its no biggie, then they say people are upset for no reason... yeah ...sure
Recommend
0
Oct 26, 2014 05:18am
Did the PIA not procure some new planes a month or so back? Now no fuel? I hope that the government has some plans for the new aircrafts.
Recommend
0
Oct 26, 2014 05:49am
Don't split the darned issue!
PIA is PIA's ONLY issue.
Recommend
0
Oct 26, 2014 06:01am
Why dont you guys sell PIA to Private investor,,, see how they make money !!!!
Recommend
0
Oct 26, 2014 06:21am
If govt. entity is doing then why not public.
Recommend
0
Oct 26, 2014 06:41am
@Azad Khial Some people in Pakistan, including Imran Khan believe that the PIA is deliberately made to be unprofitable so some people can dissolve it into their own airlime companies and acquire it completely. That is what he's against the privatization process and recommends that a different approach should be taken to make it profitable. In other words, kick out all the unnecessary politically appointed employees and hire proper staff to take care of the airline so the money comes back to the State of Pakistan..and not some political billionaire.
Recommend
0
Oct 26, 2014 08:57am
My comment is for the attention of readers with Finance background. PIA has systematically been taken to a level where it is obvious that PIA is no more a 'going concern'.
Then who will be willing to investment in PIA? In such circumstances the imminent privatization decision of Govt. is justified or not? PIA once Asia's best airline is our national asset, I don't believe many patriot Pakistan would be happy to the end of PIA.
Serious comments please.
Recommend
0
Oct 26, 2014 10:02am
Shut it down completely. It is already of no use.
Recommend
0
Oct 26, 2014 10:26am
PIA is the orphanage of the well connected.
It will not be privatised.
Recommend
0
Oct 26, 2014 10:46am
it seams nothing is functioning in this country,
if u can disconnect IK s electricity why not others too ??????????????
make an example so that things start working in proper way.
Recommend
0
Oct 26, 2014 11:20am
@Azad Khial Mr Azad emirates airline is not a private airline but a govt and run by British professionals without any corruption. If same thing can apply to PIA. Once PIA was number 1 airline and fully govt owned
Recommend
0
Oct 26, 2014 11:31am
What is wrong with Pakistan? Every where there is a problem- no money, no law and order and no political stability.Yet the leaders and the military look healthy and prosperous. The country needs strong political leadership which can take hard decisions and put the nation on track of peace and growth. I think the country's alliance with USA in the initial years of its existence gave it easy money which prevented it to develop and stand on its own feet like India did. After all we are the same people why should there be such a difference between the two countries with a common background.
Recommend
0
Oct 27, 2014 02:32am
PIA and PSO are both State Corporations .So whats the big problem.Bonds can be issued to keep them functioning.Opening of new jobs for financial guys.
Recommend
0
Oct 27, 2014 04:06am
This is nothing short of an Aided and Abetted "hostile takeover". Aided and abetted by the government.
Recommend
0
