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ISLAMABAD: Pakistan Air Force (PAF) is reportedly wavering in taking decision to sell its non-operational land as directed by the Prime Minister, to develop infrastructure in Jacobabad (Sindh) for housing the contracted F-16 aircraft and Amraam missiles, expected to be completed by January 2010, official sources told.
The government has accorded GoP guarantee to PAF to raise Rs 6 billion loan from National Bank of Pakistan (NBP) besides ex post facto approval of GoP guarantee and Term Finance Agreement for Rs 1 billion loan already obtained from Allied Bank Limited (ABL) with the concurrence of Finance Ministry.
At the same time, the government has refused to assume any financial liability in this case and directed the PAF to retire the loans as early as possible from the sale proceeds of its land.
"PAF will have to comply with the US government (USG) quality and security standards whereby delivery of F-16 and Amraam missiles would only materialise after a favourable survey report from National Disclosure Policy Committee of the USG," sources said.
Giving the background and circumstances of the case and delay in sale of PAF land, Defence Ministry officials recently briefed a meeting that sale of the land to fund the project was not viable at this time. The alternative source of financing was the best available option already agreed by Finance Minister and the Law Ministry.
Sources said that the Prime Minister had approved, in principle, the infrastructure development of Shahbaz Forward Operating Base (FOB) as Main Operating Base (MOB) at an estimated cost of Rs 7.000 billion by January 2010 to house the contracted F-16 aircraft and financing of the development project through the sale of non-operational land owned by PAF in 2007.
He had approved constitution of an eight-member Shahbaz Development Board (SDB), headed by the Chief of the Air Staff, PAF as its Chairman and, Additional Secretary Military Finance as its Member. The constitution of SDB and its functions/powers were notified on March 18, 2008.
According to sources, to cater for the envisaged delay in receiving the funds from sale of PAF land, it was recommended by the Shahbaz Development Board that the project should initially start by acquiring a loan of Rs 1.000 billion from a commercial bank. Accordingly, the loan of Rs 1.000 billion was obtained in August 2008 from Allied Bank Limited, against the GoP Guarantee and Term Finance Agreement duly approved by Finance Division and vetted by Law Division. However, the Finance Division advised that approval of ECC be obtained for the Term Finance Agreement and provision of GoP guarantee for the purpose of regularisation.
Subsequently, Air Headquarters gave a presentation to the Minister for Defence on December 4, 2008 to apprise him about the problems being faced by the PAF in acquiring the requisite funding urgently required for project Shahbaz. The methodology to crystallise, streamline and expedite the process of sale of PAF land was also deliberated at length. It was realised therein that as the development of PAF Base Shahbaz was of national importance, all measures be adopted to ensure that there were no unwarranted delays.
It was also established that non-availability of the required funds would have adverse impact on the PAF operational readiness. To ensure uninterrupted fund availability, in principle approval was accorded by the Minister for Defence for enhancing limit of term finance loan from Rs 1.000 billion to Rs 7.000 billion so as to enable SOB to ensure timely execution of the project.
MoD accordingly took up the matter with Finance Division and the latter approved the loan facility of Rs 6.000 billion arranged by PAF from National Bank of Pakistan-led consortium for the infrastructure development of MOB as Allied Bank Ltd expressed its inability to enhance the limit of loan facility to the extent of Rs 7.000 billion.
Sources said that Air Headquarters had recommended that a Board, to be named Shahbaz Development Board (SOB), headed by the Chief of the Air Staff, as its Chairman and assisted by seven Members, may be constituted.
Finance Division (Military), however, concurred with the composition and functions of the SDB but with the following observations:
a) Inclusion of E-in-C, GHQ and Additional Secretary Military Finance as members of the Board given the large size of the Project and huge financial outlay involved.
b) All the financial matters will be looked after the FA (Air Force) on case to case basis.
c) Prior concurrence of the Finance Division will be obtained in all those cases where foreign exchange is involved.
d) The additional posts required for the Project will be sanctioned with approval/concurrence of MoD/Finance Division (Military).
e) The board, instead of its Chairman (Air Chief), will be the final authority on any issue involving development of PAF Base Shahbaz.
f) The provision of foreign visits of the personnel posted to or attached with the project proposed to be sanctioned by the Chairman of the Board may be deleted.
The Chief of the Air Staff had no objection to sub-paras (a) and (e). However, he did not agree to the remaining observations of Military Finance.
The government has accorded GoP guarantee to PAF to raise Rs 6 billion loan from National Bank of Pakistan (NBP) besides ex post facto approval of GoP guarantee and Term Finance Agreement for Rs 1 billion loan already obtained from Allied Bank Limited (ABL) with the concurrence of Finance Ministry.
At the same time, the government has refused to assume any financial liability in this case and directed the PAF to retire the loans as early as possible from the sale proceeds of its land.
"PAF will have to comply with the US government (USG) quality and security standards whereby delivery of F-16 and Amraam missiles would only materialise after a favourable survey report from National Disclosure Policy Committee of the USG," sources said.
Giving the background and circumstances of the case and delay in sale of PAF land, Defence Ministry officials recently briefed a meeting that sale of the land to fund the project was not viable at this time. The alternative source of financing was the best available option already agreed by Finance Minister and the Law Ministry.
Sources said that the Prime Minister had approved, in principle, the infrastructure development of Shahbaz Forward Operating Base (FOB) as Main Operating Base (MOB) at an estimated cost of Rs 7.000 billion by January 2010 to house the contracted F-16 aircraft and financing of the development project through the sale of non-operational land owned by PAF in 2007.
He had approved constitution of an eight-member Shahbaz Development Board (SDB), headed by the Chief of the Air Staff, PAF as its Chairman and, Additional Secretary Military Finance as its Member. The constitution of SDB and its functions/powers were notified on March 18, 2008.
According to sources, to cater for the envisaged delay in receiving the funds from sale of PAF land, it was recommended by the Shahbaz Development Board that the project should initially start by acquiring a loan of Rs 1.000 billion from a commercial bank. Accordingly, the loan of Rs 1.000 billion was obtained in August 2008 from Allied Bank Limited, against the GoP Guarantee and Term Finance Agreement duly approved by Finance Division and vetted by Law Division. However, the Finance Division advised that approval of ECC be obtained for the Term Finance Agreement and provision of GoP guarantee for the purpose of regularisation.
Subsequently, Air Headquarters gave a presentation to the Minister for Defence on December 4, 2008 to apprise him about the problems being faced by the PAF in acquiring the requisite funding urgently required for project Shahbaz. The methodology to crystallise, streamline and expedite the process of sale of PAF land was also deliberated at length. It was realised therein that as the development of PAF Base Shahbaz was of national importance, all measures be adopted to ensure that there were no unwarranted delays.
It was also established that non-availability of the required funds would have adverse impact on the PAF operational readiness. To ensure uninterrupted fund availability, in principle approval was accorded by the Minister for Defence for enhancing limit of term finance loan from Rs 1.000 billion to Rs 7.000 billion so as to enable SOB to ensure timely execution of the project.
MoD accordingly took up the matter with Finance Division and the latter approved the loan facility of Rs 6.000 billion arranged by PAF from National Bank of Pakistan-led consortium for the infrastructure development of MOB as Allied Bank Ltd expressed its inability to enhance the limit of loan facility to the extent of Rs 7.000 billion.
Sources said that Air Headquarters had recommended that a Board, to be named Shahbaz Development Board (SOB), headed by the Chief of the Air Staff, as its Chairman and assisted by seven Members, may be constituted.
Finance Division (Military), however, concurred with the composition and functions of the SDB but with the following observations:
a) Inclusion of E-in-C, GHQ and Additional Secretary Military Finance as members of the Board given the large size of the Project and huge financial outlay involved.
b) All the financial matters will be looked after the FA (Air Force) on case to case basis.
c) Prior concurrence of the Finance Division will be obtained in all those cases where foreign exchange is involved.
d) The additional posts required for the Project will be sanctioned with approval/concurrence of MoD/Finance Division (Military).
e) The board, instead of its Chairman (Air Chief), will be the final authority on any issue involving development of PAF Base Shahbaz.
f) The provision of foreign visits of the personnel posted to or attached with the project proposed to be sanctioned by the Chairman of the Board may be deleted.
The Chief of the Air Staff had no objection to sub-paras (a) and (e). However, he did not agree to the remaining observations of Military Finance.
