PSO receives Rs60bln from power sector companies

KARACHI: State-owned Pakistan State Oil (PSO) on Monday announced it received Rs60 billion from power sector companies, an amount that might give some relief to the country’s biggest oil marketing company ensnared with more than Rs300 billion of stuck up receivable.

“On March 1, 2019, after close of normal business hours, Pakistan State Oil Company Limited (PSO) received an aggregate amount of Rs60 billion as partial settlement of receivables related to certain power sector companies,” the PSO said in a filing with the stock exchange.

“Consequently, PSO’s principal receivables balance from these power sector companies has reduced accordingly.” A well-placed source said PSO’s receivables stood at around Rs312 billion as at March 1, 2019. They included approximately Rs203 billion from the power sector, Rs18 billion from Pakistan International Airlines, Rs31 billion from the government and Rs62 billion from the Sui Northern Gas Pipelines Limited, the source told The News.

The country’s energy sector has been reeling under burdensome inter-corporate debt, known as circular debt, involved the entire chain from oil marketing companies, power generators, distributors and consumers.

The PSO said the paid amount has been used for loan repayments. “The amount received by the company has been used for partial repayment of its bank borrowings,” PSO said in the statement.

The power ministry said total circular debt swelled to Rs1.614 trillion at the end of 2018. The official data showed that power sector had to recover a whopping Rs1.041 trillion in lieu of unpaid electricity bills.

Last week, the government raised Rs200 billion through a sukuk to help clear part of mounting circular debt in the power sector in line with a decision of the Economic Coordination Committee of the cabinet. The government also planned to issue another Islamic bond to raise funds from the private sector for settlement of energy sector’s debts.

A consortium of Islamic banks led by Meezan Bank helped the government to structure the sukuk. The consortium comprises BankIslami Pakistan, Faysal Bank Limited, MCB Islamic Bank, Dubai Islamic Bank, Al-Baraka Bank, UBL Islamic and National Bank Islamic banking.

“The sukuk will provide the much needed liquidity to the power sector and help the government to resolve the circular debt crises,” the leading Islamic bank Meezan Bank that invested Rs88 billion in the sukuk said in a statement then.

The latest sukuk is based on Ijarah and has a 10-year maturity with semiannual rental payment. The State Bank of Pakistan said Pakistan Energy Sukuk issued by Power Holding Private Limited would be an approved security for maintenance of statutory regulatory requirement by the banks.