Pakistan State Oil (PSO) has extended an additional credit of Rs500 million to Pakistan International Airlines (PIA), allowing the national airline to gradually resume its flight operations. The monetary dispute between the two entities has been resolved and this development will lead to an increased fuel supply to PIA in the near future, as confirmed by a PIA spokesperson.
Over the past two weeks, PIA’s flight services were significantly disrupted, resulting in the cancellation of around 375 international and domestic flights. This disruption was triggered by PSO’s decision to reduce fuel supply to the state-owned airline due to outstanding dues.
PIA was unable to make payments to PSO, and the state oil company had been supplying fuel only after receiving payments in advance. As a result, PIA had to adjust its flight operations according to the available fuel supply, leading to the cancellation of numerous scheduled flights.
PSO clarified that it has not suspended fuel supply to PIA, despite the airline’s reduced payments for the supplies. PSO initially extended a credit limit of Rs15 billion to PIA, which was exhausted.
The state-owned oil company is currently facing financial challenges due to trade receivables amounting to Rs765 billion. PSO has been in discussions with PIA to find a viable solution to address this issue. Despite PIA’s outstanding balance of Rs26.8 billion as of October 26, PSO is making efforts to continue supplying fuel to the national carrier.
Both organizations held a meeting on October 16 to determine the way forward. According to the understanding reached, PSO was to supply fuel to PIA subject to payment on a flight-wise priority basis from October 16 to October 26. Following further discussions on October 27, PSO has extended an additional credit facility of Rs500 million to further support the national carrier.
