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Friday March 01, 2024

PSO faces acute liquidity crisis as Rs853bn receivables remain unpaid

Power sector is also among defaulters as it owes PSO Rs187bn and PIA has to pay Rs27bn to the oil company

By Our Correspondent
January 25, 2024
This image shows the Pakistan State Oil filling station on January 29, 2021. — Facebook/Pakistan State Oil
This image shows the Pakistan State Oil filling station on January 29, 2021. — Facebook/Pakistan State Oil

ISLAMABAD: Pakistan State Oil (PSO) is facing a massive liquidity crunch as its receivables have jacked up to a whopping Rs853 billion mainly because of default of Rs572 billion by Sui-Northern in the head of LNG imports.

The power sector is also among the defaulters as it owes PSO Rs187 billion and PIA has to pay Rs27 billion to the state-owned oil marketing company.

“This has virtually multiplied the financial miseries of PSO in terms of meeting its international financial obligations. If the appalling financial situation continues, it may default on LNG imports from Qatar,” senior officials of the Energy Ministry told The News.

“The state-owned company’s management has time and again sensitized the top government decision-makers and functionaries about its appalling financial plight which has worsened because of nonpayment of its dues from Sui-Northern i.e. Rs572 billion.”

This time PSO’s top management has asked the Petroleum Division to put pressure on SNGPL to borrow from banks to make payments. They said the state-owned oil marketing company is no longer in a position to borrow from banks to make itself operating and afloat; its credit lines have exceeded above Rs450 billion. The PSO management has agitated this issue repeatedly, arguing SNGPL should now borrow loans to make payments so that it could ensure smooth imports of LNG for the gas company.

“Though the finance ministry on Wednesday issued a letter of the comfort of Rs50 billion to PSO, it is not enough to get the company to come out of the financial crisis.”

PSO says that it needs the mechanisms to solve its current payments on time by SNGPL apart from the assurance by the gas company to reduce the stock of circular debt piled up in the head of LNG imports. According to the latest receivables and payables of PSO, the payables of the entity have increased to Rs141.497 billion, including Rs37.477 billion payables to refineries, Rs21.738 billion to PARCO, Rs8.355 billion to PRL, Rs6.799 billion to ARL and Rs585 million to ENAR, in addition to Rs104.497 billion to retire the LCs for import of diesel from Kuwait Petroleum Company and LNG imports from Qatar. After the massive hike in gas prices from November 1, 2023, the gas companies have no excuse anymore for delaying the payments of PSO, as with the rise in the gas price, the shortfall of Rs701 billion of gas companies will not only be met but the diversion cost of LNG to domestic sector in the ongoing winter season amounting to Rs201 will also be paid. The excess amount can be used to offload some of outstanding dues to PSO.