PSO’s receivables from power firms mount Rs8.4bln in October

Total unpaid bills of Rs220 billion

LAHORE: The payables of the power producers to the state-owned Pakistan State Oil (PSO) swelled to Rs8.4 billion during the last one month, piling up the total unpaid bills of the fuel supplier to Rs220 billion, an official data showed on Tuesday.

The figures available with The News showed that both public and private power sector’s companies owed this hefty amount to the PSO on account of fuel charges and late payment surcharge as of October 30. 

“Surging receivables are always a huge bottleneck in efficiently running the company,” a company’s senior official said. “We are going through serious liquidity constraints due to massive receivables and need some solid and sustained intervention by the government for resolving this lingering issue.”

Power sector’s payables account for a staggering 91.02 percent of the circular debt involving the fuel supply chain. Unending piling of power sector circular debt, which currently stands at one of the highest levels, tends to weaken the financial health of the PSO, an energy giant responsible for buying and distribution of petroleum, oil and lubricant (POL) products in the country.

Sources said mounting PSO’s receivables are hurting the fiscal position of the oil marketing company, adversely affecting its local and international payment commitments.

The PSO imports approximately 200 vessels of POL products annually, amounting to around six billion dollars with thin margins, which tend to further increase its business risks.  The sources said timely payments from its buyers are of vital importance for keeping the fuel supply chain sustainable.

The state-owned power companies owed Rs138.6 billion, having 57.46 percent share in the power sector’s payables, to the PSO. Private power producers, like HUBCO and KAPCO are also not very much behind in payment default vis-à-vis PSO with payable of Rs60.6 billion and Rs20.8 billion, respectively.

The collective share of all the private power companies in the receivables of the PSO stands at 33.65 percent of the total unpaid amount or Rs81.4 billion.  The sources said PSO’s receivables will continue to swell in the absence of any mechanism to check the circular debt menace.

After assuming the power, the present government had cleared a major chunk of the circular debt in addition to injecting Rs40 billion in January last on behalf of the power sector.   The sources said the major reason of this default is an unviable energy sector’s infrastructure.Unless the power generation becomes affordable through an efficient restructuring of power utilities, recovery process cannot be streamlined, they added.