Pakistan International Airlines (PIA) has made a firm commitment to Pakistan State Oil (PSO), pledging Rs1.35 billion for fuel supplies. This financial support enabled PSO to extend a credit facility of Rs500 million, ensuring the continuous operation of PIA.
Facing financial constraints and PIA’s default on payments, PSO responded by increasing the credit limit for fuel supply from Rs15 billion to Rs15.5 billion, safeguarding the essential functions of the national carrier.
While PIA had been prompt in paying international airports, it had fallen behind on its payments to PSO, resulting in a concerning fuel supply crisis.
In a previous agreement between PSO and PIA, the airline had utilized its entire credit facility of Rs15 billion. To resolve this situation, both parties reached an agreement on October 16, establishing that PIA would make daily payments of Rs100 million to cover its fuel usage.
However, PIA started receiving supplies in excess of the agreed amount, leading to a buildup of dues owed to PSO. Consequently, PIA defaulted on payments of Rs2 billion for fuel supplies during September and October.
PIA has now committed to settling its outstanding dues of Rs1.35 billion within one week. Additionally, PIA informed PSO authorities that they expect a payment of Rs670 million from the religious ministry, which will be used to clear their dues with PSO.
To further bolster PIA, on October 27, 2023, PSO extended the credit facility by Rs500 million, ensuring that the airline’s operations and fuel supply remain uninterrupted.
In response to some media reports, PSO clarified that it has not suspended fuel supply to PIA, despite reduced payments. While PIA’s outstanding balance to PSO amounted to Rs26.8 billion as of October 26, 2023, PSO remains dedicated to providing continuous fuel supply.
Both PSO and PIA are actively engaged in devising a practical strategy to address their financial challenges and have prioritized payment on a flight-wise basis, emphasizing their commitment to mutually beneficial solutions and uninterrupted service.