Petrol stock in Punjab dries out

ISLAMABAD: With extreme failure in recovery of electricity bills and emergence of circular debt in the power sector up to Rs262 billion, the inefficient Ministry of Water and Power has virtually exposed Pakistan State Oil (PSO) to the default of Rs50 billion of 6 local banks and the block of its Letter of Credits (L/Cs) amounting to Rs110 billion owing to which POL imports got alarmingly squeezed and the stocks of motor gasoline (petrol) in Punjab got dried out, sources in the Ministry of Petroleum and Natural Resources, PSO and Ministry of Water and Power told ‘The News.’
The orders of oil imports given by PSO have been rejected by oil suppliers as its most of the L/Cs have choked down. Resultantly PSO have reduced its POL supplies by 50 percent. Other OMCs (oil marketing companies) also followed the suit and reduced the oil supplies to dealers by 50 percent.
This has deprived the masses in province of petrol. The people of Punjab are already facing zero availability of CNG for transportation purposes and now petrol has also become a rare commodity. Long queues in Punjab are visible on petrol pumps because of the shortage in supply of petrol. Panic buying of petrol is going on that has worsened the situation.
The LPG prices are touching new highs in Punjab and cylinder of 11.8kg has surged to over Rs2,200 and the domestic consumers are facing zero gas supplies and if it is available in some pockets of the provinces that is with low pressure. PSO has long been sensitising the economic managers sitting at Ministry of Finance about its poor financial health and imminent default but the top mandarins remained cool and unmoved taking the country to Stone Age era.
On top of that the stock of furnace oil which is used for thermal power generation have almost depleted and no more import is on the cards as PSO’s financial health is so weak and it is unable to open new L/Cs for more import. The oil chain supply has been virtually broken. In last year, the receivables of PSO surged up to Rs220 billion and in the current year, the PSO receivables right now stands at Rs200 billion whereas its payables and liabilities stand at over Rs55 billion.
PSO spokesperson when contacted admitted that the Punjab is facing acute petrol shortage. She said that PARCO (Pak-Arab Refinery Company) remained closed for one week and NRL was under maintenance. PSO caters to the demand of Punjab from mid country refinery PARCO but owing to its closure PSO lifted some stock of petrol to partially cater to the needs of the Punjab province. She also disclosed that a vessel carrying 50,000 metric ton of petrol is arriving in Karachi out of which 40,000 ton of petrol belongs to PSO and 10,000 ton belongs to Shell. About the furnace oil stock, she said that some of the stock has been transported to Punjab to make the power plants in the province operational. However, further import of furnace oil seems not an uphill task.
However, the sources said that PSO normally imports 2,20,000 ton of petrol as the refining capacity of the country has plummeted to just 80,000 ton a day. In the wake of closure of CNG stations, the demand of petrol has increased manifold. The furnace oil supply to powerhouses in Punjab has also decreased to 6,000 ton a day from 22,000 ton that will also lead to further loadshedding of 5-6 hours more. The source said that incase finance minister releases Rs48 billion to PSO, it will be able to take 20 days to restore the fuel supply chain.
Coming to the Ministry of Water and Power inabilities to tackle the power sector, Pakistan’s electric power system sustains mammoth loss of Rs100 billion every year on account of failure to recover electricity bills. Though the loss has been brought down from Rs128 billion to Rs100 billion in last 7-8 months but the deficit is still on the higher side and under this scenario the sector cannot thrive on long-term basis.
“We have sold out electricity of Rs900 billion to consumers in one year and recovered Rs800 billion with huge deficit of 12 percent (Rs100 billion),” a senior official of Ministry of Water and Power told ‘The News’.
He said, “We have improved the recovery rate by 2 percent and lifted it to 88 percent from 86 percent, but the loss is still high.” However, the official data about the circular debt and receivables of the Pakistan Electric Power Company (Pepco) tells an entirely different story and negates the claim of the government that recovery of electricity bills has improved. The data shows that the circular debt has again swelled to Rs280 billion whereas the receivables have risen to Rs576 billion.
The data says that Sindh has to pay Rs63 billion to Pepco, Punjab Rs4 billion, Balochistan Rs7 billion, KP Rs1.6 billion, AJK Rs43 billion, and K Electric Rs32 billion.
According to the data, private sector has surprisingly emerged as the biggest defaulter as it owes to pay Rs388 billion. Out of Rs388 billion, the running defaulters which are mainly influential business tycoons running their factories are required to pay about Rs100 billion, but the government has not only failed to recover the said amount from them, but criminally continues to provide them electricity. In the list of running defaulters, the top mandarins without sharing the list told ‘The News’ that many business establishments of some towering political figures are also included. This shows the incumbent regime is highly compromised in punishing the running defaulters.
However, the common consumer does not expect such treatment from top management of any electric distribution company as whenever he, for any reason, fails to pay the electricity bills, he faces disconnection of electricity supply, but the said unscrupulous elements known as running defaulters are still enjoying the electricity supply without the clearance of their bill amounting to Rs100 billion.
Meanwhile, Finance Ministry has released Rs17.5 billion to PSO immediately to improve the oil supply in Pakistan in general and in Punjab in particular and Rs10 billion more will be arranged by Ministry of Water and Power by January 31, Finance Secretary Dr Waqar Masud told The News. He said that the said amount will help PSO to unblock some of L/Cs.
Mr Waqar said that in the current month of January PSO will be provided with the liquidity of Rs27 billion in to to.
He said they had also carved out a plan under which in the month of February required payments will be disbursed to the PSO. He said two to three day will be consumed more in overcoming the shortage of petrol in Punjab. He said a vessel carrying 50,000 tons of petrol has arrived in Karachi that will be unloaded by today (Friday). This will also help provide solace in restoring the supply of petrol to Punjab.
However, Minister for Petroleum and Natural Resources said that 8-10 days will be taken to bring normalcy in the availability of petrol.