PSO offers Rs500m credit relief to PIA amid financial woes

• Monetary dispute between PIA, PSO has been resolved.
• PIA's flight services remained disrupted in last 2 weeks.
• Decision comes after senior officials met on Oct 16.

KARACHI: Pakistan State Oil (PSO) has provided Pakistan International Airlines (PIA) with a further Rs500 million in credit, enabling the national airline to gradually restore its flight operations.

According to a The News report published on Sunday, the monetary dispute between the two aforementioned entities has been resolved, paving the way for an increase in fuel supply to the airline company in the near future, a PIA spokesperson said.

Over the last two weeks, PIA's flight services remained significantly disrupted, resulting in the cancellation of approximately 375 international and domestic flights. This disruption was triggered by the state oil company's decision to decrease fuel supply to the state-owned air carrier following outstanding 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 meetings was held on October 27, PSO said.