PSO faces cash crunch as LNG imports surge and receivables mount

ISLAMABAD: Pakistan State Oil Co., the country's largest fuel supplier, is struggling to maintain its operations as it faces a cash crunch due to rising liquefied natural gas imports and mounting receivables from state-owned entities, industry officials said on Wednesday.

The company’s receivables from Sui Northern Gas Pipelines Ltd., the main gas distributor, surged to Rs492.8 billion as of Oct. 2, up from Rs455.1 billion, according to latest data. Sui Northern accounts for more than 63 percent of PSO’s total receivables, which reached Rs777.5 billion, the data showed.

"This has put PSO in the red zone, making it unable to clear the letters of credit both for oil imports from Kuwait Petroleum Corp. and standby letters of credit for smooth LNG imports,” a senior PSO official told The News on condition of anonymity.

“We have to borrow from commercial banks to maintain PSO’s operation for warding off the import liabilities, particularly for LNG imports.” The daily payables and receivables position of PSO reveals that the total receivables of PSO from Sui Northern, the power sector (GENCOs/CPPA, HUBCO, and KAPCO), PIA, and in some heads of exchange rate differential and price differential claims from the federal government from 1996 to 2014 have hiked to a whopping Rs777.514 billion, whereas its payables stand at Rs130.432 billion.

More importantly, the entities that owe PSO a mammoth amount also include Rs168.244 billion in the head of late payment surcharges due to not making timely payments to PSO. Sui Northern continues to emerge as the biggest defaulter of PSO while the power sector is the second biggest defaulter as it owes PSO Rs184.389 billion, the data showed.

GENCOs or Center Power Purchase Agency (CPPA) is required to pay RS150.939 billion, HUBCO Rs28.450 billion, and KAPCO Rs5 billion. As far as the Pakistan flag carrier—PIA is concerned, it is also required to pay Rs26.168 billion.

However, in the head of the price differential claims from the government of Pakistan during the period 1996-2014 stands at Rs8.934 billion and RS65.240 billion in the head of exchange rate differential of the FE 25 loan.

The payables of PSO have increased to RS130.432 billion which includes the payables of Rs58.315 billion to refineries and Rs72.117 billion required to be paid for clearing the LCs for fuel import from Kuwait and LNG import from Qatar.

The data further showed that PSO is required to pay Rs33.082 billion to PARCO (Pak-Arab Refinery Company), RS12.225 billion to Pakistan Refinery Limited (PRL), Rs2.789 billion to National Refinery Limited (NRL), Rs8.851 billion to Attock[h1] Refinery Limited (NRL) and Rs 1.368 billion to ENAR.