Pakistan State Oil (PSO) is facing a significant challenge with outstanding receivables from the national flag carrier, Pakistan International Airlines (PIA), which has reached Rs. 21.7 billion. The petroleum corporation is proposing a pragmatic approach to expedite the recovery process from PIA by suggesting a Rs. 4 per liter levy on Jet-A1 fuel.
As of January 31, 2024, PIA’s debt to PSO stands at Rs. 15.8 billion, encompassing both principal and late surcharges. PSO has previously expressed reservations about the transfer of PIA’s liabilities to a holding company as part of the airline’s revival plan, a proposal made last year. The petroleum corporation rejected this suggestion, citing challenges associated with being a publicly listed company and potential adverse effects on its interests.
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In response to this, PSO has recommended exploring alternative settlement options to address the outstanding dues. These options include cash payments, Pakistan Investment Bonds (PIBs), equity shares in the new company, asset transfers, or the imposition of a levy on Jet-A1 fuel.
The Board of Management at PSO has thrown its support behind the decision to reject the proposal of transferring the corporation’s receivables to the holding company. Instead, they advocate for a comprehensive exploration of various settlement options to recover the pending dues from PIA. In a recent development, it has been disclosed that PSO will approach the federal government seeking a Rs. 70 billion bailout to avert a potential default. This move underscores the gravity of the financial situation and the urgency of finding viable solutions to address the outstanding receivables issue.
