LAHORE: The government has finally leased out its precious asset in the United States —Roosevelt Hotel, a property of the Pakistan International Airlines (PIA) — to the New York City Administration for a period of three years against USD 220m.

A contract has also been signed between the government and the NYC administration/government, according to Federal Minister for Railways and Aviation Khawaja Saad Rafique.

“After various exhaustive exercises, we finally succeeded in finding a way out to overcome the challenges to the country’s most precious asset/heritage in New York (USA). So we have signed a contract with the NYC administration that will operate the hotel for a period of three years. Under this contract, we will receive US $220m that will enable us to clear the hotel’s various liabilities besides earning handsome revenue for our country’s treasury,” the minister said while talking to journalists at a press conference here on Sunday.

“Since our property was already facing a threat of being landmarked, this contract has also saved it from such a big threat. Had the hotel fallen into the landmarks category, we would have been restricted to use it for the hotel purpose with the current 19-storey building alone that, after coming out of this danger, can now be used for a high-rise up to 40-storey with change of business,” he maintained.

Aviation minister terms the contract ‘wonderful’; says three major airports to be outsourced; terms Malaysian court responsible for PIA plane issue

Sharing further details of the contract, he said, the three-year term included a guaranteed-income for a period of one-and-a-half year. In the last few days, the possession of 600 of the total 1,025 rooms had been handed over to the NYC government, he said and added that the possession of the remaining 425 rooms would also be handed over to the authorities in the NYC within the next 30 days. Under the contract, according to him, the room charges for the first year would be USD202, followed by USD205 in second year and USD210 in third year. Moreover, the hotel, which is about 100 years old, would be handed over to the government of Pakistan (PIA/Civil Aviation Authority) after three years in the same condition as of today.

Talking about the background to the property, the minister said, the hotel was closed in 2020 (Covid time) and its expenditures (during its closure) were US $25m per annum. A liability of US $20m already existed on part of the hotel. Moreover, the hotel union, considered very powerful in NYC, was also demanding US $66m. The danger of being put into the category of landmarks was also looming over the property.

“Keeping in view all this, our predecessors (the PTI government) decided to run the hotel under the public-private-partnership (PPP), which was the right decision. But it couldn’t do so, so the PDM government inherited t his issue and finally resolved it,” Mr Rafique said.

He said the contract also saved the government from the liabilities of 479 employees as now, under this agreement, only 77 employees would work and the remaining 402 would be laid off.

“It is really a wonderful contract that has benefitted our government,” he claimed.

Talking about other decisions, the aviation minister said the aviation ministry had decided to outsource operation of the country’s three major airports in Karachi, Islamabad and Lahore.

“Islamabad would be the first to be outsourced—the most feasible model being practised by most developed countries.”

He revealed that the outsourcing process would be completed through the International Finance Corporation (IFC)—a subsidiary of the World Bank that has adequate expertise in this regard.

“We have learnt that the IFC has been approached (regarding the matter) by over 20 foreign companies based in the US, Turkey, China, UAE and other developed countries. However, the IFC will do this all through a competitive bidding process. We will give the consultancy payment to the IFC in a way that suits us. The minimum of the total amount will be paid to the IFC while the rest of the chunk will be made subject to the success of the outsourcing project. After completion of the outsourcing period, we will take over the operations.”

The minister said the Civil Aviation Authority (CAA) had completed the runway upgrade and other development works at Quetta, Lahore and Faisalabad airports. The direct Haj flights from Quetta airport had also been started while Gwadar International Airport would start operation by end of September this year. Moreover, the government had made a plan to make Sukkur and Dera Ismail Khan as international airports.

Talking about the PIA plane issue in Malaysia, the aviation minister held the local court of Kuala Lumpur responsible for the issue. According to him, the court gave a verdict in favour of the company (which had provided us with some planes) without hearing our side.

“When we came to know (about the issue), our legal team visited Malaysia and resolved the matter within 72 hours. I clearly say that the PIA is not at fault in this matter,” he claimed.

He said the company took action in haste as it feared its payment might not be paid by the PIA, keeping in view the deteriorating political and economic situation in Pakistan.

“But we met them besides approaching the ambassador of Malaysia and succeeded in resolving this issue,” the minister said.

Published in Dawn, June 5th, 2023