PSO extends Rs500m credit facility to beleaguered PIA

KARACHI: Pakistan State Oil (PSO) has extended another Rs500 million credit facility to Pakistan International Airlines (PIA), which would help the national flag carrier to normalise its flight operations in coming days.

The financial issues between PIA and PSO have been settled and fuel supply would increase in the coming days, a PIA spokesperson said.

The PIA flight operations have been severely hampered in the last two weeks, which saw cancellation of around 375 international and domestic flights after PSO cut supply to the state-owned airline due to non-payment of dues.

PIA defaulted on payments it owes to PSO and the state oil company had been supplying fuel after receiving payments in advance. The national airline in the last two weeks adjusted its flight operations as per the fuel supply, cancelling several scheduled flights.

On the other hand, PSO said that it has not suspended fuel supply to PIA despite reduced payments by the carrier against the supplies. “PIA was given Rs15 billion credit limit, which was already exhausted,” PSO said.

The state-owned oil company said that it was currently grappling with financial difficulties caused by trade receivables worth Rs765 billion. It has been in talks with PIA to come up with a feasible solution to tackle this problem. Despite PIA’s outstanding balance of Rs26.8 billion as of October 26, PSO is striving to supply fuel to the national carrier, it said.

A meeting was held on October 16 between senior officials from both state-owned organisations to determine the course of action.

As per the understanding, PSO was to supply fuel to PIA, subject to payment against flight-wise priority from October 16 to October 26. In order to further support the national carrier, PSO has extended the credit facility by Rs500 million after another round of meeting was held on October 27, PSO said.