ISLAMABAD – The federal government has decided to sell the Precission Engineering Complex (PEC), a business unit of loss-making national carrier Pakistan International Airlines (PIA), to the Pakistan Air Force (PAF) for Rs2.5 billion in cash.
The amount is just one-fourth of the Rs10 billion, a price offered by a sole bidder to acquire 60 percent share in PIA.
Reports said that the total value of the business unit is Rs6.5 billion as it includes Rs4 billion in pension-related liabilities for both serving and retired employees.
The PEC manufactures high precision parts for the aerospace industry and a number of other industries. It is an integrated facility that houses major engineering disciplines under one roof, including investment casting, conventional and CNC machining, Optics, PCB, Electrical, Electronics and Composites. Multi-disciplinary teamwork enables intelligent decision making and high quality output in all phases of product development and manufacturing.
A ministerial committee has granted approval to sell PEC to PAF while a formal summary will be send to the federal cabinet for final nod, Express Tribune reported.
As of December last year, PEC’s total assets were valued at Rs1.2 billion, against total liabilities of Rs2.9 billion, resulting in a net negative equity of Rs1.73 billion.
Under the reported agreement, PAF will pay Rs2.5 billion in cash over the period of five years. It will assume Rs3 billion in pension and provident fund liabilities for 259 retired employees over the next decade. PAF will also assume Rs1.1 billion in estimated liabilities for 251 current employees.
A four-member ministerial committee, chaired by Finance Minister Muhammad Aurangzeb, has finalized the transaction structure.
Reports added that PAF has planned to set up a special purpose vehicle to facilitate the transaction, ensuring that current employees continue with their contract conditions, including pay, allowances, and benefits.
