LAHORE: The PIA Board of Directors will decide the fate of the $700-million 'controversial' spares parts deal in its 337th meeting on Saturday (tomorrow).
The PIA in September last year had signed an agreement with the Messers Transworld Aviation FZE (TWA) for investment and consultancy in procurement of all aircraft spares/GSE sale of surplus inventory and management of repairable.
As one of the members, Omar Sharif Bokhari, had written a dissenting note on the deal and after objections by some other members, the board had not approved it in its last meeting. Mr Bokhari had noted that the terms and conditions of the agreement should be made more favourable for the national carrier.
"In its 337th meeting on Feb 25, the BoDs presided over by its chairman Defense Minister Ahmed Mukhtar will review the various clauses of the agreement for investment and consultancy in procurement of all aircraft spares/GSE sale of surplus inventory and management of repairable between the PIA and TWA as well as its performance," an airline official told Dawn on Thursday.
According to the BoDs last meeting's minutes (available with Dawn), another member Husain Lawai observed that the agreement was "inappropriately drafted and some of the clauses were self-contradictory". He further noted that the agreement provided the first right of refusal to the TWA whereas the PIA had the right of market research. "Contrary to the normal practice of one country jurisdiction the agreement had jurisdiction in two countries, the UK and UAE," Mr Lawai said suggesting that the management should vet all legal documents with a view to protect the best interest of PIA. "$700-million credit line is also untenable and misleading", he said.
Another member and federal finance secretary Dr Waqar Masood Khan said the PIA was already facing many problems and the agreement with TWA added one more to the long list. "The clauses regarding first right of refusal by TWA and the market research by PIA with no price matching speak of the agreement being badly drafted," he said, adding the TWA could have been pre-qualified as the existence of competition was the hallmark of the procurement process.
Mr Khan further said the board should be apprised of the financial and operational feasibility which provided base for the agreement. He said the existing conditions justified walking out of the agreement. Yousuf Waqar, another member, said it had been purported as if TWA was extending a credit facility of $700 million to PIA whereas in fact it was only allowing a deferred Letter of Credit. He pointed out that TWA reserved the right to terminate the agreement immediately whereas the PIA was required to give a two-quarter notice if it wished to exercise the exit clause therein. "The agreement is biased and responsibility should be fixed to pinpoint any malafide in drafting it," he said. - Zulqernain Tahir