Pakistan State Oil (PSO) has recently resumed the fuel supply for 39 Pakistan International Airlines (PIA) aircraft after receiving an advance payment of Rs220 million ($789,804) from the airline, a spokesperson for PSO confirmed on Saturday.
The fuel supply interruption had led to the cancellation of 14 international and domestic flights earlier in the week due to fuel shortages. The state-owned PSO had terminated its supply to PIA owing to outstanding dues, adding to the financial woes of the national carrier, which has been accumulating substantial losses and unpaid dues amounting to hundreds of billions of rupees. In response, the government, gearing towards privatization of the airline, declined the airline’s request for Rs 23 billion ($76 million) in operational support, initiating a restructuring plan under the guidance of Prime Minister Anwaar-ul-Haq Kakar to stabilize the airline’s financial standing.
Confirming the resumption of fuel supply, PSO spokesperson Naila Erum stated, “PKR 220 million have been received [from the PIA] for Saturday and Sunday’s refueling. Thirty-nine flights’ list [has been] given for 21.10.23.” However, the PIA’s spokesperson remained unavailable for comment at the time of filing this report.
Apart from the immediate fuel crisis, the airline faces additional financial challenges in terms of aircraft maintenance and part replacements, requiring Rs100 million per day for fuel payments to PSO, which had halted supply earlier this week due to outstanding dues amounting to Rs1.4 billion.
Pakistan has committed to fiscal discipline measures, including the privatization of loss-making entities, as part of a $3 billion agreement with the International Monetary Fund (IMF).
According to Naila Erum, as of October 16, 2023, the outstanding amount owed by PIA to PSO stands at Rs 26.825 billion, comprising Rs 14.893 billion as the principal amount and Rs 11.932 billion as Late Payment Surcharges (LPS). The payable amount against current supplies as of October 17 was stated to be Rs 2,072 million.
PIA spokesperson Abdullah Khan acknowledged the fuel supply disruption earlier in the week, attributing it to payment issues. Khan further highlighted the government’s decision to pursue the privatization of the airline, temporarily discontinuing interim financial assistance in an effort to sustain the airline’s operations.
With ambitions to resume flights to the United Kingdom within the next two months, PIA grapples with the fuel crisis amid the ongoing challenges stemming from the European Union’s Aviation Safety Agency’s revocation of the airline’s authorization to fly to the bloc in 2020, following a pilot license scandal.
