PSO economic miseries rising

Power sector, Sui Northern, PIA arrears swell to Rs274 bn; state kitty

to pay Rs60.2 bn in head of late payment surcharge due to delay

in clearance of dues; Shahid Khaqan says the issue of

power sector arrears taken up with Ministry of Water and Power

ISLAMABAD: The economic miseries of the Pakistan State Oil (PSO) have touched a new high, as its cash flow situation continues to deteriorate on account of Rs274 billion default by the power sector, Sui Northern and Pakistan International Airlines (PIA).

The PSO is currently facing an unprecedented liquidity crunch which will further worsen if the authorities concerned don’t bail out the state-owned giant.

The PSO top bosses say the finance ministry has cleared Rs6 billion, but the Ministry of Water and Power is inclined to provide Rs4 billion out of Rs6 billion. The release of Rs4billion will bring no relief for the PSO against the arrears of Rs235 billion.

The PIA and Sui Northern have become permanent headache for the PSO owing Rs15.2 billion and Rs14.1 billion respectively.

The receivables increased to Rs274 billion on March 23 out of which the power sector has to pay Rs235 billion, PIA Rs15.2 billion and Sui Northern Rs14.1 billion.

As per documents, on account of the power sector’s inability to clear arrears, the national exchequer will face the loss of Rs60.2 billion in the head of late payment surcharge.

The PSO is in need of Rs63 billion required to clear the letter of credit against imports from Kuwait Petroleum Company and stand by letter of credit against the imports of LNG.

When contacted, Federal Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi said his ministry had taken up the issue of recovery of arrears from the power sector with the Ministry of Water and Power under a 7-day payment agreement inked between the MoWP and MoPNR.

With regard to payments from the PIA and Sui Northern, the minister said the PSO management was in touch with the said entities and the MoNR and finance ministry.

The oil marketing company top officials say the borrowing limits of the PSO had also exhausted and no more credit lines were available with it to continue day-to-day operations for import of furnace oil and diesel.

“In the past, the PSO time and again threatened to stop importing fuel and in the case of PIA and Sui Northern it had in the recent past written letters to the top managements of the defaulting companies expressing inability to import jet fuel and LNG if both the entities don’t clear their dues.”

The receivables and payables position of PSO further tells that the public sector electricity generation companies (Gencos) owe the PSO Rs140.7 billion, Hub Power Company (Hubco) Rs61.9 billion, Kot Addu Power Company (Kapco) Rs23.4 billion and WPPO Rs7.4 billion in the head of price differential of lower sulphur furnace oil ad high sulphur furnace oil. 

More importantly, Saba Power and Southern Electric need to pay Rs0.1 billion and K. Electric Rs1.5 billion. The government is also needed to pay Rs9.6 billion in the head of price differential claims.

The financial position sheet also discloses that payables of the oil marketing company which are supposed to be paid to refineries have increased to Rs9.2 billion. 

The government owned oil marketing company is supposed to pay to the Pak-Arab Refinery (Parco) Rs4.1 billion, Pakistan Refinery Limited (PRL) Rs1.2 billion, National Refinery Limited (NRL) Rs0.3 billion, Attock Refinery Limited (ARL) Rs2.5 billion, BYCO Rs0.6 billion and ENAR Rs0.5 billion.