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PSO yet to get Rs8.5 bn from SNGPL

By Khalid Mustafa
November 23, 2016

ISLAMABAD: Pakistan State Oil (PSO) is not being paid Rs8.5 billion for the first four LNG vessels that Sui Northern Gas Pipeline Limited (SNGPL) has consumed, a senior official at Ministry of Petroleum and Natural Resources told The News

Interestingly, the issue has become complex, as the said first four LNG vessels were imported from Qatar in 2015 by the authorities concerned without following proper laid down procedure owing to which PSO is unable to get payment of Rs8.5 billion that has worsened the cash flow for it.

The top management of PSO fears that non-payment by SNGPL will make the state-owned oil marketing company unable to honour its payment commitments to LNG suppliers on time which will seriously affect the supply chain of LNG and its creditability, reveals the official letter of PSO’s managing director to the top man of SNGPL of which a copy is also available with The News.

Another official document available with The News also unfolds the surge in economic woes of PSO mentioning that the Ministry of Water and Power (MoWP) has continues to violate the 7-day agreement signed with PSO in February 2015.

Under the agreement, MoWP is bound to make the payment to PSO against the current supplies of furnace oil in seven days’ time. But under this head, the default amount has increased to Rs10.96 billion for the current financial year 2016-17. The Ministry of Water and Power has defaulted against the current furnace oil supplies despite the fact that the power sector owes to pay Rs202.5 billion to PSO against the outstanding supplies of furnace oil.

When contacted, SNGPL says that power sector is not paying to the gas company after using RLNG for power generation which is why it is unable to pay PSO.

The document available with The News says that PSO has incurred significant financial cost on payment to suppliers owing to that fact that Sui Northern has not been making payments to PSO against LNG supplies in line with its cash collection cycle. The state owned oil marketing company has borne financial cost of Rs833.76 million on this account.

As far as PIA is concerned, it owes to pay Rs14.9 billion to Pakistan State Oil, reveals the latest document. During the recent blockade of Islamabad by PTI, PSO had disconnected the supply of Jet Fuel for four PIA planes owing to which PIA agreed to pay against the current fuel supplies.

However, the backlog of Rs14.9 billion is still very much there and time is not far off, when PSO will be on verge of collapse if such a sorry state of affairs continues unabated, the official said.