PSO liquidity crisis scales new peak

ISLAMABAD: The liquidity crisis faced by the state-owned oil marketing company Pakistan State Oil has peaked with the rise of its receivables to an all-time high of Rs331.8 billion, mainly on account of the increase in the overall circular debt of the power sector to Rs1.2 trillion.

According to the receivables position of PSO as of yesterday, the power sector is the biggest defaulter with outstanding payments of Rs273.5 billion.

Northern Power General Co Ltd (GENCO-III) is the largest debtor, owing Rs145.7 billion to PSO, followed by the Hub Power Co with Rs71.3 billion and Kot Addu Power Co Ltd with Rs45.6 billion. Jamshoro Power Co Ltd (GENCO-I) owes PSO some Rs9.3 billion.

The onset of liquefied natural gas imports has exacerbated the financial woes of PSO by giving birth to another kind of circular debt: Sui Northern Gas Pipelines Ltd owes PSO Rs19.9 billion for gas it has taken but not yet paid for.

With outstanding payments of Rs17.3 bilion, Pakistan International Airlines Corp is another laggard. PSO also faces the loss of Rs9.6 billion due to price differential claims by the Pakistan government.

The story does not end here for PSO. It endured a loss of Rs11.5 billion due to the significant depreciation of the rupee against this US dollar this year, on account of Rs86 billion in foreign currency loans previously acquired to pay off its liabilities to overseas suppliers and sustain its ability to make further purchases on letters of credit.

Mired in circular debt, PSO borrowed Rs129.846 billion from 18 commercial banks between 2014 and 2017 to stay afloat.

PSO has desperately sought Rs60 billion from the finance ministry to clear letters of credit, but at its last meeting the Economic Coordination Committee sanctioned the release of just Rs10 billion; it is yet to be released.