ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet has approved the execution of the settlement agreement with the Roosevelt Hotel Union and the New York City Government (NYCG) to lease out 1,025 rooms for three years.
The ECC meeting presided over by Finance Minister Ishaq Dar on Wednesday also approved Rs153 million technical supplementary grant (TSG) to the Ministry of Water Resources for payment of court cases’ fee for the settlement of the dispute with India under the Indus Waters Treaty.
The Ministry of Aviation in a summary to the ECC stated that Roosevelt Hotel Corporation (RHC) was required to reach a settlement with the Union on payment of severance and pension to the 469 employees as per local laws as consequent to non-settlement of payment, several law-suits and arbitration claims were filed against the hotel by the Union as well as the Pension Fund in various courts.
Since the leasing of the hotel site for redevelopment was delayed, the hotel was allowed by the cabinet to partially open with 300 rooms as a limited-service hotel to partly cut on the carrying-on cost and to meet one of the many demands of the union.
While the process of re-opening of the hotel was in progress, the PIA-IL Management informed about an opportunity arisen whereby New York City has sought the utilisation of the hotel’s 1,025 rooms over a period of three years for immigrants.
A summary was moved to the ECC by the Aviation Ministry seeking approval for availing this opportunity. The ECC constituted a committee to negotiate with the Union and the City to reach a settlement. The committee constituted proceeded to New York for negotiations without waiting for the minutes of the meeting due to paucity of time. Now, the PIA-IL has informed that the committee has concluded its negotiations with the Union and the City.
It also informed that the results of the negotiations were placed before its Board of Directors on 8th May which after concurring with the position brought out by the committee resolved that the matter may be placed before the ECC of the Cabinet for seeking their approval and execution of the proposed settlement agreement with the Union and contract with the City, as well as, withdrawal of pending lawsuits between the hotel, Union, and the City after making a full disclosure.
The Ministry of Privatisation supported the recommendations of the PIA-IL Board and proposed that (i) approval and execution of settlement agreement with the union and City immigrant business contract in consideration of expected financial projections of immigrants business and attached risks; (ii) withdrawal of pending law suits by the Hotel with the Union, and City of New York pursuant to the terms of settlement agreement with the Union; (iii) in ease the City decides to terminate the contract after 18 months, the unpaid liabilities of the Union $28 million would be paid by the government; (iv) ECC may direct National Bank of Pakistan (NBP) to implement ECC’s decision dated December 31, 2021 with regards to roll over of $42 million loan along with mark up for a further period of two years till December 31, 2024 as now there is a viable business plan and hotel will be able to service the debt; (v) ECC may also direct NBP to waive compliance of the covenant(s) of $142 million loan between the Hotel and NBP pertaining to lock box/ escrowing of funds by the NBP for interest, real estate tax, and insurance till December 31, 2024, enabling RHC to manage its cash flows in terms of payment to Union, and other hotel’s expenses and liabilities; and (vi) in order to avoid any potential default vis-à-vis weekly payments to the Union due to any reason, government is requested to extend a funding of approximately $ 5-10 million to RHC/PIA-IL.
The ECC also approved Rs4 billion (equivalent to US$ 20 million) as rupee cover in favour of the Ministry of Federal Education and Professional Training for the World Bank Programme “Actions to Strengthen performance for inclusive and responsive education”.
Copyright Business Recorder, 2023