PSO seeks Rs101 bn for fuel stock by June 30 for smooth power generation

ISLAMABAD: Badly hit by circular debt, the Pakistan State Oil (PSO) has asked the government to release Rs101 billion on war footing required to build fuel stock by June 30 for smooth electricity generation to avert any untoward situation in the months to come, particularly in the holy month of Ramazan.

The cash strapped government-owned company has sent an urgent communication to the Ministry of Water and Power and Finance Ministry asking for the release of over Rs100 billion (Rs51 billion for piling up the fuel stock for power generation up to June and Rs50 billion to clear its backlog to some extent), a senior official at Ministry of Petroleum and Natural Resources told The News.

“In the last meeting of the Cabinet Committee on Energy, Prime Minister Nawaz Sharif asked the authorities concerned to utilise all kinds of resources to bring down power outages,” he said.

The official said piling up of fuel stock for power generation up to June 30 requires Rs51 billion, while the PSO is victim of circular debt as its receivables have surged to Rs253 billion which has eroded the liquidity capacity of the entity.

More importantly, the Ministry of Water and Power has also failed to pay Rs43 billion against the current fuel supplies to power houses and to this effect the ministry has defaulted by seven days credit mechanism.

Both the ministries of Petroleum and Natural Resources and Water and Power had inked seven days credit mechanism under which the latter was bound to pay against the current fuel supplies within a week time, but unfortunately the Ministry of Water and Power has defaulted the agreement as it has not paid Rs43 billion against current supplies.

Spokesman for PSO Nasim Aftab, when contacted, confirmed that the oil marketing company needs immediate payment of Rs101 billion to cater to furnace oil demand of the Ministry of Water and Power up to June 30 including the high consumption month of Ramazan. In addition, the PSO has also requested the Ministry of Finance for budgetary provision for rest of the old standing balance.

Nasim Aftab also said the Rs253 billion receivables also include Rs63 billion as late payment surcharge and Rs10 billion as price differential claims. Apart from it, the Sui Northern also owes to pay Rs13 billion in the head of LNG. As far as PIA is concerned, it has also emerged as headache for the PSO, as the national flag carrier needs to pay Rs15 billion against the supply of jet fuel.