ISLAMABAD: The government on Monday decided to restrict the outsourcing of airports only to Islamabad International Airport (IIA) for the time being and continued to extend about Rs21.4 billion worth of 14 supplementary grants even a day after the passage of the federal budget.

A steering committee meeting on outsourcing of airport operations, presided over by Finance Minister Ishaq Dar, appeared to be as confused as the transaction adviser — International Finance Corpo­ration of the World Bank — was unclear if the outsourcing was planned for all the three major airports — Islamabad, Lahore and Karachi.

The participants were also uncertain about the financial matters pertaining to the IFC’s advisory services.

Informed sources told Dawn that it was finally concluded that outsourcing of airport operations to a foreign entity should restricted to IIA in the first go to be followed with others in due course with subsequent approval process.

IFC “gave a presentation to the committee which took decisions as to the future roadmap for moving forward for outsourcing of the first airport in order to improve service delivery and match best international practices,” said an ambiguous brief public statement after the meeting.

Strangely though, the Econ­omic Coordination Comm­ittee (ECC) had decided on March 31 to kick off a 25-year outsourcing of operations and land assets at three major airports, to be run through a public-private partnership, to generate foreign exchange reserves, according to a then finance ministry’s statement.

14 supplementary grants totalling Rs21.4bn approved

“The outsourcing of three airports has been initiated within the scope of public-private partnership… to engage private investor/airport operator through a competitive and transparent process to run the airports, develop appertaining land assets and enhance avenues for commercial activities and to garner full revenue potential,” the finance ministry had said.

The IFC and Pakistan Civil Aviation Authority (PCAA) had subsequently signed transaction service agreement in the second week of April followed by visits of the technical teams of adviser to the three airports.

The single bidder — IFC — was also given a step-wise payment structure besides a $4 million success fee on completion of outsourcing at the rate of $1.5m for each airport.

Supplementary grants

Later, the finance minister also presided over meeting of the ECC to approve Rs21.408bn worth of 14 supplementary grants to various ministries and divisions. This showed the functioning of the public finance mechanism of the government offices, which could not finalise their financing needs or process them in time before the budget was presented in the national assembly on June 9 and not even until it was passed on June 25 by the parliament.

Some of the major supplementary grants pertained to the Ministry of Planning and Development on account of national census, Ministry of Interior and Frontier Corps and Ministry of Aviation for interest payments.

An official statement said the ECC approved Rs6bn supplementary grant to planning ministry for census operations.

It said the planning ministry had originally demanded Rs34bn for census, out of which Rs22bn had already been disbursed during FY2021-22 and 2022-23. The finance ministry asked the planning ministry to seek fresh supplementary grant for Rs6bn on June 24 for pending payments, which could not be deferred to next fiscal year.

The ECC also approved Rs1.4bn to Frontier Corps (KP) including Rs1bn for Frontier Corps KP (North) and Rs400m to Frontier Corps KP (South) to meet the pending liabilities of ration bills. Similarly, Rs7.955bn additional funds were approved to Ministry of Interior on two separate heads — mostly to meet employees’ expenses of the Fro­ntier Corps KP (North and Sou­th), Frontier Corps Balo­chistan, Frontier Const­abulary, Pak­istan Rangers of Sindh and Punjab.

Another major supplementary grant of Rs4bn was granted to Ministry of Aviation as markup payment support to Pakistan International Airlines Cor­por­ation on account of five major inter­national overdue payment obligations against various services including aircraft leases, insurance, Haj flights and IATA dues.

The ECC approved Rs1.304bn grant to Ministry of National Health Services and Coor­dination to meet its liabilities. Other grants including Rs12.30m to National Security Division to meet its employee related expenses, Rs63.60m to Ministry of Parliamentary Affairs, Rs222.037m Ministry of Aviation to meet employees’ expenditure, Rs69.5m for Islamabad High Court building and Judges residences, Rs60m to President’s Secretariat, Rs22.560m to Ministry of Clim­ate Change.

Published in Dawn, June 27th, 2023

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