PSO continues to be victim of circular debt

Receivables alarmingly soar to Rs241.1 billion
and payables increase to Rs54 billion

ISLAMABAD: Pakistan State Oil (PSO) continues to face the adverse impact of circular debt and there is no way forward carved out by the government to wriggle the entity out of the crisis owing to which the cash flow situation is feared to emerge.

The arrears that Pakistan Electric Power Company (Pepco) owes to PSO have alarmingly surged to over Rs131 billion. The Ministry of Water and Power has showed inability to clear the backlog of arrears pledging that the PSO will be made the payments at all costs against the current supply of furnace oil being used in Gencos for electric power generation, the relevant official told The News.

The most ironic part of the story is that PSO is not being provided even the huge amount of Rs16 billion against current furnace supply despite the seven days’ agreement earlier agreed and inked with Ministry of Water and Power. “So much so that the government has so far failed to pay Rs8.3 billion for the RLNG used in power plants that has caused more surge in financial problems,” the relevant official of PSO told.

The same problem, PSO is facing from the Pakistan International Airlines (PIA) which is not paying the arrears of Rs14 billion, the official said and added saying that PIA pays in advance to Shell Oil Marketing Company for purchasing the product but when it comes to PSO, PIA lifts the petroleum products on credit and such kind of treatment is no more tolerable, the official said.

As of today, the receivables of PSO have soared to Rs241.1 billion and payables have amounted to Rs54 billion, reveals the financial sheet of the state owned entity available with Pakistan Observer. (this correspondent).

The financial sheet about receivables and payables of PSO as of September04 tells how grave a situation PSO has been braving since long. According to the sheet, PSO needs to be paid Rs125.5 billion by Pepco and Rs6.1 billion in the head of price differential of LSFO and HSFO.

Hub Power Company owes to pay to PSO Rs55 billion and Kot Addu Power Company Rs21.8billion. Likewise, Saba Power and Southern Electric also have to pay Rs0.4 billion, and K. Electric Rs1.6 billion.

In addition, receivables of PSO from PIA have also increased to Rs14 billion and in the head of price differential claims that are to be paid by the government to PSO stand at Rs9.6 billion.The payables of PSO to refineries stand at Rs10.2 billion which include Rs5.5 billion for Parco, Rs2.1 billion which are to be paid to PRL (Pakistan Refinery Limited), Rs 1.2 billion for NRL (National Refinery Limited), Rs1.1 billion for ARL (Attock Refinery Limited), and Rs0.2 billion for Byco and Rs0.6 billion for ENAR refinery. PSO also owes Rs43.7 billion in the head of opening of letter of credits required for petroleum products and LNG payments.