PIA seeks CCoR help to resolve issues of outstanding taxes

The management of PIA has requested the Cabinet Committee on Restructuring (CCoR) for assistance in resolving all outstanding issues related to turnover tax, sales tax at import stage and federal excise duty (FED) to minimise the tax burden on national flag carrier, it is learnt.
Sources said that the high-ups in the Ministry of Defence and PIA briefed the CCOR about the restructuring plan seeking financial support and relief in taxes to convert average monthly loss of Rs 1.039 billion into saving by implementing the plan. An official said that the Finance Minister wanted to know what would be the impact of these taxes and financial package sought by the national carrier on the budget.
Finance Minister Hafeez Sheikh was quoted as saying that the PIA management must come up with a plan as to what would be the impact of the request to roll over Rs 19.6 billion of TFC and Sukuk with five-year grace period and $146 million of bank loans on the debt servicing.
An official said that the top officials of finance ministry were unhappy over PIA management's request to inject Rs 20 billion and convert Rs 8 billion government of Pakistan loan into equity. PIA management's contention is that when financial stability and breakeven is achieved by 2013, the government may consider divesting its equity, paving the way for pubic-private partnership.
The financial position of the PIA has become very bleak with total loss mounting to Rs 18.702 billion during last 18 months with average monthly loss of Rs 1.039 billion. Secretary Finance Dr Waqar Masood has urged the management to control the losses and focus on improving governance.
PIA expenditure stood at Rs 65.95 billion during the first half of 2011 against total revenue of Rs 55.83 billion. PIA has requested financial support of Rs 20 billion in cash along with rollover of $146 million bank loans, Rs 19.6 billion TFCs and Sukuk and conversion of Rs 8 billion loan into equity which would enable PIA to undertake restructuring aimed at turnaround the entity.
Through restructuring by 2013, the PIA would save Rs 266 million from financial restructuring, Rs 474 million from fleet renewal and revenue initiatives and Rs 340 million from operational restructuring. The meeting decided that the injection of finance into the airline would be discussed further in the coming meeting of the CCOR next week.