By Staff Reporter
ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet has given its approval for the execution of a settlement agreement between the Roosevelt Hotel Union, the New York City Government (NYCG), and the Roosevelt Hotel Corporation (RHC). Under the agreement, the hotel will lease 1,025 rooms for a period of three years.
During the ECC meeting, chaired by Finance Minister Ishaq Dar on Wednesday, a technical supplementary grant of Rs153 million was also approved for the Ministry of Water Resources.
The grant will be used to cover court cases’ fees related to the settlement of a dispute with India under the Indus Waters Treaty.
The Ministry of Aviation presented a summary to the ECC, stating that the RHC needed to settle outstanding severance and pension payments for its 469 employees in accordance with local laws.
Failure to make these payments resulted in multiple lawsuits and arbitration claims being filed against the hotel by the Union and the Pension Fund in various courts.
Due to delays in the redevelopment of the hotel site, the cabinet allowed the hotel to partially open with 300 rooms as a limited-service hotel. This measure aimed to reduce operating costs and address some of the demands from the union.
While the process of reopening the hotel was underway, the PIA-IL Management informed the ECC about an opportunity that had arisen.
New York City sought to utilize the hotel’s 1,025 rooms over a three-year period for immigrants. The Aviation Ministry moved a summary to the ECC, seeking approval to avail the opportunity.
A committee was formed by the ECC to negotiate with the Union and the City to reach a settlement. The committee proceeded to New York for negotiations without waiting for the minutes of the meeting due to time constraints.
The PIA-IL has now reported that the committee has concluded negotiations with the Union and the City.
The results of the negotiations were presented to the PIA-IL Board of Directors on May 8. After agreeing with the committee’s position, the board resolved to seek approval from the ECC for the execution of the proposed settlement agreement with the Union, the contract with the City, and the withdrawal of pending lawsuits between the hotel, Union, and the City. The board also emphasized the importance of full disclosure.
The Ministry of Privatisation supported the PIA-IL Board’s recommendations and proposed several actions. These include the approval and execution of the settlement agreement with the Union and City for the immigrant business contract, the withdrawal of pending lawsuits, and the government assuming unpaid liabilities of $28 million in case the City decides to terminate the contract after 18 months.
Additionally, the National Bank of Pakistan (NBP) may be directed by the ECC to implement its decision dated December 31, 2021, regarding the rollover of a $42 million loan with markup for a further two-year period until December 31, 2024.
The ECC may also direct the NBP to waive compliance with the covenant(s) of a $142 million loan between the Hotel and NBP pertaining to the lockbox/escrowing of funds for interest, real estate tax, and insurance until December 31, 2024. This would enable the RHC to manage its cash flows for payments to the Union and other hotel expenses and liabilities.
Furthermore, to avoid potential defaults in weekly payments to the Union, the government is requested to provide funding of approximately $5-10 million to RHC/PIA-IL.
The ECC also sanctioned Rs4 billion as rupee cover in favor of the Ministry of Federal Education and Professional Training. The funding will support the World Bank Program “Actions to Strengthen Performance for Inclusive and Responsive Education.”
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