ISLAMABAD, April 25: The Economic Coordination Committee of the Cabinet (ECC) on Thursday approved corporatization/ commercialization of Wapda, and also agreed on extension of guarantee to PIA for bridge financing worth Rs6.5 billion till June 30, 2002.

The ECC, which was presided over by Minister for Finance Shaukat Aziz, asked the ministry of water and power to work out details of corporatization/commercialization of Wapda in consultation with the Ministry of Finance.

According to the details issued after the meeting about the principles of loan transfer, Corporate entities will be allocated only third party loans, which include federal government loan (FGL), foreign relent loans, direct foreign loans and Wapda bonds. No internal loan between Wapda and corporate entities, such as Net Worth loan, will figure in this scheme of transfer of liabilities.

And once transferred to corporate entities, these loans will cease to appear in Wapda’s books, except for Wapda bonds. The companies will be directly responsible to the lenders for debt servicing and there will be no back-to-back arrangement between the companies and Wapda in this regard.

For WAPDA Bonds, a special back-to-back arrangement will be executed with corporate entities to reflect debt service liabilities of these bonds in their books. The total debt stock allocated to 12 corporate entities and the residual power wing will be equal to the balance of loans appearing in Wapda’s books on June 30, 2001 audited by the Auditor General of Pakistan. Loans will be transferred to corporate entities on the same terms and conditions as given in the original loan agreement signed by Wapda and lenders.

Following will be the modalities: Listing of all outstanding party loans as on June 30, 2001 giving project-wise details of allocations, ending loan balances and terms and conditions pertaining to each loan, soliciting Wapda’s approval to the restructuring of Net Worth loan, integration of principles currently being drawn by Pakistan Electric Power Company (PEPCO), obtaining approval of lenders to the drafts Supplementary Business Transfer Agreements (SBTAs) involving their consent to transfer of liabilities, and signing of SBTAs with the corporate entities for the final transfer of liabilities.

The ECC also approved an extension of guarantee for bridge finance facility up to June 30, this year to PIA. The ECC had earlier approved GOP guarantee of TFC issue amounting to Rs6.5 billion and a bridge loan of Rs5.4 billion for PIA.

The ECC was briefed by the chairman PIA about the financial and operational performance of the organization. The meeting was told that PIA was expected to achieve the target of Rs2.5 billion profit by the end of December this year. So far, in the first quarter from January to April, PIA posted a profit of Rs1.24 billion. Its load factor of international routes has increased to 81 per cent and on the domestic sector to 74 per cent.

The ECC noted that PIA was making concerted efforts to improve operational image of the national carrier by a timely pursing induction of new aircraft to gradually upgrade its fleet. PIA achieved 98 per cent flight accuracy in timing during Hajj flights. It operated 576 flights during Hajj. For the first time it did not opt for the chartered planes for the Hajj operation and utilized its own aircraft.

The ECC appreciated improvements in the PIA service and hoped that it would aggressively market its convenient international non-stop flight to Europe and America as they were cost effective and save travel time. PIA has also agreed to purchase the leased 747-300 aircraft from Cathy Pacific to provide modern fleet for long haul flights.

The ECC reviewed the prices of the sensitive items and noted with satisfaction the stability in the prices of various consumer goods. It also expressed satisfaction over comfortable stocks of fertilizer, oil, sugar, wheat, rice and vegetable ghee and oil.

The meeting noted that during the week under review i.e. 18.4.2002 over 11.4.2002, average prices of 18 items registered decease. The prices of tomatoes decreased by 31 per cent, onion 10.9 per cent, garlic 10.2 per cent, wheat 4.2 per cent, chicken farm 1.1 per cent, red chilies and wheat flour each 09.9 per cent. The prices of bananas, moong, masoor, and gram pulse, mustard oil, bread (plain), sugar, gur and lawn fell in the range of 0.2 to 4.2 per cent.