ISLAMABAD: The federal government has refused to accept the stringent conditions imposed by commercial banks for issuing new loans of Rs 15 billion to PIA.
According to government sources, a consortium of 6 banks had offered PIA a loan of Rs 15 billion in return for international guarantees, letter of comfort, 2 PIA aircraft as security. The conditions for obtaining concessions from the State Bank were also set.
Sources further said that one of the conditions imposed by the banks was that the new loan should be linked to the old agreement under which the loan repayment plan of Rs 263 billion was planned, Ministry of Privatization. When he presented all these proposals before the Ministry of Finance, he refused to accept them and said that these conditions protect the interests of banks and in the presence of international guarantees these conditions are a bit high.
Finance Ministry Spokesperson Qamar Abbasi did not respond to a query on the ministry’s rejection of these conditions.
Sources say that Habib Bank Limited, National Bank of Pakistan and Meezan Bank had offered PIA Rs. Faisal Bank, Bank of Punjab and Askari Bank offered loans of two, two billion or a total of six billion rupees.
The loan offer was for two years, to be taken by PIA to buy back the two aircraft and meet other financial requirements.
Federal Minister for Privatization Fawad Hasan Fawad is trying to privatize PIA. Banks suggest that half of the loan of fifteen billion rupees, ie seven and a half billion rupees, under international guarantees, which is able to finance ministry. Acceptance will be issued while for the other half i.e. seven and a half billion rupees, the banks have stipulated the assurance of compliance with other agreements (Letter of Comfort) from the Ministry of Finance and the provision of two planes as mortgage (Guarantee).
