ISLAMABAD: The federal government is to revive the interdepartmental committee headed by the vice president of the Planning Commission to prepare recommendations for the resolution of the administrative and financial problems of the Roosevelt hotel of PIA, in New York.
Sharing the details, sources said, the ECC approved a summary regarding the financial challenges of the Roosevelt Hotel Corporation (RHC) on August 6, 2020, to form a committee headed by the Vice Chairman of the Planning Commission and comprising the secretaries of the finance division, the aviation division and the law. & Justice to discuss the financial and legal implications of the matter and submit its report. Accordingly, after extensive deliberations, the committee submitted its recommendations for financial support of $142 million and $30.3 million respectively to the RHC for consideration by the ECC.
The ECC approved the committee’s recommendations at its meetings held on September 2, 2020 and June 16, 2021. Accordingly, the committee ceased to exist after the completion of its task.
Subsequently, a meeting was held chaired by the Prime Minister’s Advisor for Finance and Revenue (now Minister of Finance) on 16 November 2021 to discuss current RHC issues/challenges. MD PIA-IL, while pointing out the issues, requested the ECC Chair to form a committee with a clear mandate to deliberate from time to time on matters relating to RHCs. Taking the delicacy of the said proposal, it was decided to constitute the proposed committee
In view of the above, the committee consisting of the following officers with terms of reference is proposed for review/approval by the ECC: (i) Vice-Chair of the Planning Commission (Chair); (ii) Financial Secretary (member); (iii) Secretary Aviation Division (member) and (iv) Secretary Law and Justice Division (member).
The terms of reference (ToR) of the committee will be as follows: (i) disposal of furniture/facilities and equipment etc.; ; (ii) resolve the issues of former union members of CHR, including termination benefits and pension, etc. ; (iii) guiding the management of PIA-IL/RHC in order to protect the RHCs from landmark decisions; and (iv) any other financial or administrative matters from time to time until the final fate of RHC is decided by the appropriate forum.
During a high-level meeting, chaired by the then financial adviser, held on November 16, 2021 regarding the proposal to designate Roosevelt as a benchmark, participants were informed that PIA-IL had received three emails of IHR, Roosevelt’s management company, which The Landmarks Committee of Community Board 5 (CB5) of New York was reviewing an application for assessment for Roosevelt historic designation. In this regard, meetings of the CB5 were scheduled for November 30, 2021 and December 9, 2021, and thereafter recommendations would be submitted to the Landmark Preservation Commission by the CB5.
The attention of the participants was drawn to the meeting held on August 24, 2021, and chaired by the Minister of Finance, during which, among others, the following decisions were taken: (i) as PIA-IL did not no in-house expertise, therefore an advisor/consultant should be appointed to check the terms of reference of the financial advisor by the Privatization Commission and assess the feasibility report without referring explicitly to RHC; and (ii) the current scope of privatization, i.e. the lease of the RHC site as approved by the ECC needs to be extended to have more options, i.e. that the RHC site can be leased/disposed of as is and where is the base and demolition of the current RHC building and its reconstruction through a joint venture project for a mixed use development, i.e. ie offices and retail.
The Minister of Finance wanted an update on the decisions, to which the Secretary of the Privatization Commission (PC) informed the participants that the Cabinet Committee on Privatization (CCoP) at its meeting held on November 15, 2019 on a summary proposed by the Aviation Division had approved the constitution of a working group for the elaboration of the terms of reference (ToR) for the rental of the Roosevelt site for the establishment of a joint project -venture. The decision of the CCoP was ratified by the Council of Ministers on November 27, 2019. Therefore, it had to be modified to incorporate the additional scope desired by the participants at the meeting of August 24, 2021.
After extensive discussion of the matter, it was decided that the Aviation Division would submit a summary to the CCoP/Cabinet and request an amendment to the previous decisions of the CCoP/Cabinet. The Aviation Division/PIA has been instructed to take note of the Land Mark Committee procession and take necessary action in consultation with the AGP office.
The meeting was informed that on September 15, 2021, the ECC had approved funding of $130.3 million, which includes RHC/PIA-IL funding of $30.3 million. Since Roosevelt was not generating any cash flow to support the debt, the Treasury Department therefore ordered the parent company, i.e. PIACL, to borrow the total sum of $130.3, and, subsequently, to pay $30.3 million to PIA-IL immediately. .
After much discussion of the matter, it was decided that the Finance Division would issue a DO to the Ministry of Aviation advising them to expedite the disbursement of funds of $30.3 million by PLACL to PIA-IL/ RHC. It was also agreed that PIA-IL/RHC would continue to follow up the matter with PIACL.
On the $142 million NBP loan, participants were informed that, in accordance with the NBP loan agreement, repayment of the principal of the $142 million NBP loan will be made in four equal quarterly installments of 35 $.5 million from December 31, 2021. The loan is due September 30, 2022. Given RHC’s cash constraints, it has been requested that the NBP loan of $142 million along with the uplift be renewed for the next 2 years.
The meeting decided that PIA-IL/RHC, as the borrower, would formally request the renewal of the loan as well as the uplift for the next 2 years with the lender, ie NBP.
Regarding the decision relating to the Furniture, Arrangement and Equipment (FF&E) of the Roosevelt, the participants decided that the Committee set up by ECC in the past on the Roosevelt under the chairmanship of Dy Chairman, Planning Commission, and composed of the secretaries of Aviation, Finance and Law be revived and instructed to deliberate on FR&E or any other matter, and submit its recommendations to the Competent Authority as soon as possible.
Copyright Business Recorder, 2022