Even a day after the passage of the federal budget, the government decided on Monday to restrict airport outsourcing to Islamabad International Airport (IIA) for the time being and continued to provide 14 supplementary grants totalling Rs21,400,000,000.
Finance Minister Ishaq Dar presided over a steering committee meeting on the outsourcing of airport operations that appeared to be as confused as the transaction adviser, International Finance Corporation of the World Bank, was uncertain as to whether outsourcing was planned for all three major airports — Islamabad, Lahore, and Karachi.
In addition, the participants were dubious about the financial aspects of the IFC’s advisory services.
According to informed sources, it was ultimately determined that outsourcing airport operations to a foreign entity should initially be limited to IIA, to be followed by others in due course with a subsequent approval process.
IFC “gave a presentation to the committee that made decisions on the future roadmap for outsourcing the first airport in order to improve service delivery and align with international best practices,” according to a vague and brief public statement released after the meeting.
According to a statement from the then-finance ministry, the Economic Coordination Committee (ECC) had decided on March 31 to launch a 25-year public-private partnership to outsource the operations and land assets of three major airports in order to generate foreign exchange reserves.
14 additional grants totaling Rs21,4 billion were approved.
The finance ministry had stated, “Three airports have been outsourced within the scope of public-private partnership… to engage a private investor/airport operator through a competitive and transparent process to operate the airports, develop related land assets, expand commercial activities, and maximize revenue potential.”
In the second week of April, the IFC and Pakistan Civil Aviation Authority (PCAA) signed a transaction service agreement, which was followed by technical teams of advisers visiting the three airports.
In addition to a $4 million success fee upon completion of outsourcing at a rate of $1.5 million per airport, the sole bidder, IFC, was given a step-wise payment structure.
Supplemental Subsidies
Later, the finance minister also presided over a meeting of the ECC to sanction 14 supplementary grants totaling Rs21,408 billion for 14 different ministries and divisions. This demonstrated the operation of the government offices’ public finance mechanism, as they were unable to finalize their financing requirements or process them in a timely manner before the budget was presented to the national assembly on June 9 or until it was passed by the parliament on June 25.
Ministry of Planning and Development for the national census, Ministry of Interior and Frontier Corps, and Ministry of Aviation for interest payments received some of the largest supplementary grants.
The ECC has approved a Rs6 billion supplementary grant to the planning ministry for census operations, according to an official statement.
According to the document, the planning ministry initially requested Rs34 billion for the census, of which Rs22 billion had already been disbursed during FY2021-22 and 2022-23. The finance ministry instructed the planning ministry on June 24 to pursue a Rs6 billion supplementary grant for payments that could not be deferred to the following fiscal year.
The ECC also approved Rs1.4 billion for Frontier Corps (KP), consisting of Rs1 billion for Frontier Corps KP (North) and Rs400 million for Frontier Corps KP (South), to cover outstanding ration bill liabilities. Similarly, additional funds totaling Rs7,955 billion were granted to the Ministry of Interior under two separate headings, primarily to cover the employee expenditures of the Frontier Corps KP (North and South), Frontier Corps Balochistan, Frontier Constabulary, Pakistan Rangers Sindh and Punjab.
A further major supplementary grant of Rs4 billion was granted to the Ministry of Aviation as markup payment support to Pakistan International Airlines Corporation for five major international overdue payment obligations against various services, including aircraft leases, insurance, Hajj flights, and IATA dues.
The ECC approved a grant of Rs1.304 billion for the Ministry of National Health Services and Coordination to satisfy its obligations. Other grants include Rs12.30 million for the National Security Division’s employee-related expenses, Rs63.60 million for the Ministry of Parliamentary Affairs, Rs222.037 million for the Ministry of Aviation’s employee-related expenses, Rs69.5 million for the Islamabad High Court building and judge’s residences, Rs60 million for the President’s Secretariat, and Rs22.560 million for the Ministry of Climate Change.
Sudan