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PSO circular debt continues mounting as receivables stand at Rs269 billion

By Khalid Mustafa
January 26, 2017

ISLAMABAD: The monster of circular debt continues to haunt Pakistan State Oil (PSO) as the receivables of the state-owned oil marketing company have alarmingly surged up to Rs269 billion which was at Rs260.5 billion on January 19.

This means the receivables have swelled by over Rs8 billion in just 6 days showing that the circular debt of PSO is on the rise. And the payables have reached Rs61.8 billion.

As per the receivable and payable position of PSO as of today (January 25) exclusively available with The News, the power sector has emerged as the biggest defaulter of PSO that continues to be the black hole in the economy, as it owes Rs240.5 billion as of January 25. By January 19, power sector was needed to pay Rs233.4 billion to Pakistan State Oil. This shows that receivables from power sector have surged by Rs7.5 billion in just 6 days.

In the wake of delay in payments from the power sector, out of Rs240.5 billion, the government will have to pay the huge amount of Rs59.7 billion in the head of late payment surcharge from the natural exchequer to PSO.

In the power sector, electric power generation companies (Gencos) are needed to pay Rs138.8 billion, Hub Power Company (HUBCO) Rs70.9billion, Kot Addu Power Company (KAPCO) Rs22.8 billion, Saba power and Southern Electric Rs0.1 billion and K. Electric owes to pay Rs0.8 billion. And the amount payable to PSO in the head of price differential of high sulpher furnace oil and low sulpher furnace oil now stands at Rs9.6 billion.

Pakistan International Airlines (PIA) has also emerged as a headache for Pakistan State oil as receivables from PIA has also surged to Rs15.1 billion on January 25, 2017 from R14.5 billion on January 19, 2017.

Meanwhile, in its latest correspondence with secretary finance, PSO has also asked for finance ministry’s intervention for payment of dues of Rs14.4 billion which Pakistan International Airlines (PIA) owes to it. The payment due from PIA has now increased to Rs15.1 billion.

The letter mentions that PIA is repeatedly defaulting on its payment obligations. Though, the repeated commitments have been made by PIA to reduce the outstanding dues, still they are failing to maintain the daily upliftment payments. PSO also told finance ministry as it is already facing the liquidity crunch and non-payment by PIA is aggravating the situation more. And it is getting for PSO to maintain the supply chain throughout the country for uninterrupted PIA operations.

Meanwhile power sector is experiencing the unsustainable financial condition just because of the subsidy non payments and non-settlement of GST refunds. And prime minister has been sensitized about the financial constraints of power sector, reveals a communication of cabinet committee on energy of which copy is also available with Pakistan Observer.

And the amount in the head of price differential claim from the government has also hiked to Rs9.6 billion. However, receivables from Sui Northern in the head of LNG stood at Rs3.7 billion.

However, the payables of Pakistan State Oil have also increased to Rs61.8 billion out of which it is needed to pay Rs10.3 billion to refineries. Out of Rs10.3 billion, PSO owes to pay Rs5.9 billion to Pak Arab Refinery Company (PARCO), Rs1.1 billion to Pakistan Refinery Limited (PRL), National Refinery Limited (NRL) Rs0.9 billion, Attock Refinery Limited Rs1.7 billion, Byco Rs0.2 billion and ENAR Rs0.5 billion. And in the head of letter of credit for fuel supplies from Kuwait Petroleum Company and standby letter of credit for LNG supplies, PSO is to pay huge amount of Rs51.5 billion.