Islamabad: The Economic Coordination Committee (ECC) Thursday approved the draft Transaction Advisory Agreement (TASA) reached with the International Finance Corporation (IFC) by the Pakistan Civil Aviation Authority (PCCA) for the outsourcing of three airports.
After a meeting of the ECC of the federal cabinet presided over by Finance Minister Ishaq Dar, a press release read that the committee considered a summary of the Ministry of Aviation on the engagement of the IFC as transaction advisor for the outsourcing of three airports.
Economic Coordination Committee of the Cabinet(ECC) meeting chaired by Finance Minister Senator Ishaq Dar, approved number of financial proposals of Power,Petroleum, Aviation and Housing & Works Divisions including engagement of IFC as Tech Advisor for outsourcing three airports pic.twitter.com/uwJ3RiUyep
— Ministry of Finance (@FinMinistryPak) March 30, 2023
The ECC was apprised that the outsourcing of three airports had been initiated within the scope of the Public-Private Partnership Act-2017 to engage private investors/airport operators through a competitive and transparent process to run the airports, develop appertaining land assets and enhance avenues for commercial activities and to garner full revenue potential.
The ECC endorsed the same old terms to which it had objected four days ago after the IFC – a member of the World Bank Group – refused to take its advisory fee towards the conclusion of the transaction. The fee will be paid on the achievement of various milestones. In addition to that, if Pakistan decides to terminate the service agreement at any stage, it will have to pay penalties.
Pakistan has agreed to pay the fees to the IFC on the achievement of milestones.
On submission of the inception memo, the IFC will get $200,000, and on a draft technical report of three airports, it will receive another $300,000.
On submission of the transaction structure, $200,000 more will be paid while an amount of $300,000 will be paid on the request for proposal and bid evaluation.
The IFC will get $6 million as a success fee on completion of outsourcing of three airports, $2 million fragmented against each airport.
It is important to note that Pakistan’s aviation sector is struggling with the country’s national flag carrier running accumulated losses of nearly Rs400 billion ($1.41 billion).
Pakistan is facing an acute balance of payment crisis, with its central bank reserves dipping so low as to hardly cover four weeks of imports.
