Government Considering Outsourcing Islamabad Airport Exclusively

ISLAMABAD: On Monday, the government decided to limit the outsourcing of airports to only Islamabad International Airport (IIA) for the time being. A day after the federal budget was passed, the government continued to extend 14 extra grants totaling roughly Rs21.4 billion.

Finance Minister Ishaq Dar presided over a steering committee meeting on outsourcing airport operations. The transaction adviser, the International Finance Corporation of the World Bank, was unsure if the outsourcing was planned for all three major airports, Islamabad, Lahore, and Karachi.

The financial aspects of the IFC’s consulting services raised questions among the participants as well.

BeGreen was informed by reliable sources that it was ultimately decided that outsourcing airport operations to a foreign corporation should start with IIA and then expand as necessary with following approval procedures.

After the meeting, IFC “gave a presentation to the committee which took decisions as to the future roadmap for moving forward for outsourcing of the first airport in order to improve service delivery and match best international practises,” according to an evasive, brief public statement.

Strangely enough, according to a statement from the then-finance ministry, the Economic Coordination Committee (ECC) had decided on March 31 to begin a 25-year outsourcing of operations and land assets at three major airports, to be run through a public-private partnership, in order to generate foreign exchange reserves.

The finance ministry had stated that the outsourcing of three airports was being done as part of a public-private partnership in order to “engage private investor/airport operator through a competitive and transparent process to run the airports, develop appertaining land assets, enhance avenues for commercial activities, and garner full revenue potential.”

The IFC and Pakistan Civil Aviation Authority (PCAA) had subsequently signed transaction service agreement in the second week of April followed by visits of the technical teams of adviser to the three airports.

The single bidder — IFC — was also given a step-wise payment structure besides a $4 million success fee on completion of outsourcing at the rate of $1.5m for each airport.

Supplementary grants

The finance minister afterwards presided over a meeting of the ECC to approve 14 supplemental grants totaling Rs21.408 billion for various ministries and divisions. This demonstrated how the public finance system of the government offices operated, as they were unable to resolve their financing requirements or process them prior to the budget being presented in the national assembly on June 9 or even until it was approved by the parliament on June 25.

Some of the major supplementary grants pertained to the Ministry of Planning and Development on account of national census, Ministry of Interior and Frontier Corps and Ministry of Aviation for interest payments.

An official statement said the ECC approved Rs6bn supplementary grant to planning ministry for census operations.

According to the report, the planning ministry had requested Rs 34 billion for the census, of which Rs 22 billion had already been paid out in FY 2021–2022 and 2022–2023. On June 24, the finance ministry requested the planning ministry seek a new Rs6 billion additional grant for outstanding payments that could not be postponed to the following fiscal year.

The ECC also approved the payment of Rs1.4 billion to Frontier Corps (KP), of which Rs1 billion will go to Frontier Corps KP (North) and Rs400 million to Frontier Corps KP (South), to settle outstanding ration bills. Similar to this, Rs. 7.955 billion in additional funding was granted for the Ministry of Interior under two different headings. This money would mostly be used to pay the salaries and benefits of the Frontier Corps KP (North and South), Frontier Corps Balochistan, Frontier Const­abulary, and Pakistan Rangers of Sindh and Punjab.

In order to assist Pakistan International Airlines Corporation with markup payments related to five significant international overdue payment obligations for a variety of services, including aircraft leases, insurance, Haj flights, and IATA dues, a significant supplemental grant of Rs4 billion was given to the Ministry of Aviation.

To cover its liabilities, the ECC granted a grant of Rs1.304 billion for the Ministry of National Health Services and Coordination. Other grants include Rs12.30 million to the National Security Division to cover employee-related costs, Rs63.60 million to the Ministry of Parliamentary Affairs, Rs222.037 million to the Ministry of Aviation to cover employee costs, Rs69.5 million for the building of the Islamabad High Court and the homes of the judges, Rs60 million to the President’s Secretariat, and Rs22.560 million to the Ministry of Climate Change.

Published by BeGreen 27th June, 2023