• Consumers to pay Rs3.51 per litre more on petrol, diesel
• PIA’s request for bailout package, suspension of payments to CAA and FBR denied
ISLAMABAD: The Economic Coordination Committee (ECC) of the cabinet on Wednesday approved per-litre hikes of Rs1.64 and Rs1.87 in margins to petroleum dealers and oil marketing companies (OMCs), respectively, on petrol and diesel sales and allowed Rs40 billion supplementary grants to armed forces.
However, the committee did not immediately clear a bailout package to PIA, nor did it allow the suspension of its tax and service charges payable to the Civil Aviation Authority and the Federal Board of Revenue without a sustainable restructuring plan for the airline.
In a meeting chaired by Caretaker Finance Minister Dr Shamshad Akhtar, the ECC noted with concern that PIA’s total debt and liabilities had crossed Rs743bn in December last year — five times greater than the value of its assets — and business as usual would increase its debt and liabilities to Rs2 trillion and annual losses to touch Rs260bn per year by 2030.
About Rs383bn worth of PIA’s current liabilities are underwritten by the government, which, being the 92pc owner, also must take responsibility for the remaining liability.
An official statement said the Ministry of Aviation submitted a summary regarding the financial support for PIA and its restructuring. Secretary Aviation gave a detailed briefing to the finance minister about the PIA’s financial burdens, liabilities and the need for its restructuring.
The ECC, after discussing and reviewing the timelines and costs, decided to form a separate committee to assess the PIA’s restructuring plan.
The Economic Coordination Committee also rejected a request for deferring the monthly payment of Rs1.3bn federal excise duty (FED) by PIA to the FBR, and Rs700 million per month to the CAA as embarking charges.
It was also decided that the finance division and the State Bank of Pakistan would support PIA to tackle its financial challenges after a concrete restructuring plan has been finalised.
Fuel margins up
On a summary of the Ministry of Energy’s petroleum division, the ECC approved an increase in petroleum dealers’ margins on petrol and high-speed diesel (HSD) by Rs1.64 per litre in four fortnightly instalments of Rs0.41 per litre with effect from Sept 15.
The committee also approved a hike in oil market companies’ (OMCs) margin on both products by Rs1.87 per litre in a similar four fortnightly instalments of Rs0.47 per litre with effect from Sept 15.
The dealers’ margin would now go up to Rs8.64 per litre from the existing Rs7, while OMCs would get Rs7.87 per litre compared to Rs6 at present. Cumulatively, the consumers would now have to bear the additional burden of Rs3.51 per litre on both products.
The PDM coalition government earlier gave a commitment to the dealers to increase their margin by Rs1.64 per litre in four steps starting with Sept 1, but this could not be implemented after a change of government. The OMCs also sought higher margins.
The dealers’ margin on petrol and HSD used to be Rs4.90 and Rs4.13 per litre until mid-July last year but was then increased to Rs7. On the same pattern, the OMCs’ margin was also later increased from Rs3.68 per litre to Rs6 in phases, between December and March.
The committee also approved a technical supplementary grant worth Rs40bn against various approved projects of Defence Services and for international security allowances, subsidies and miscellaneous expenditures during the ongoing fiscal year.
This included Rs33bn for the Pakistan Army, Rs7bn for the Navy and Rs50m for the Air Force. However, the amount will not be released at once, but on a case-to-case basis.
