PSO faces financial crises due to non-payment of Rs4.7 bn

ISLAMABAD: The Pakistan State Oil, already plagued by the menace of huge circular debt, has landed into more financial miseries as the ministry of water and power has breached its new agreement by not paying Rs4.7 billion which is overdue from November 26, 2015.

Under the new agreement sealed with PSO on February 7, 2015 the Ministry of Water and Power is bound to pay the current dues under seven days arrangement to ensure the sustainable supply of furnace oil for power generation, but the ministry under the latest scenario has failed to pay Rs4.6 billion exposing PSO to more financial travails.

This has been disclosed in the official correspondence to Ministry of Water and Power from Pakistan State Oil of which copy is exclusively available with The News.

The letter with the subject of ‘Overdue amount of Rs4.7 billion under seven days credit arrangement’ managed from the Ministry of Water and Power that was sent on December 10, 2015 from Managing Director Sheikh Imranul Haq to Secretary of Water and Power disclosed that no payment has been allocated to PSO against furnace oil supply under 7 days’ arrangement for the last 15 days meaning by that from November 26, 2015 owing to which the financial agonies of the company are getting worsened.

In the same correspondence, beleaguered by fiscal constraints the PSO also asked the ministry of water and power to expedite the repayment plan for clearing the backlog of Rs188 billion.

The PSO’s top management in the correspondence also referred to the letter of ministry of water and power written on February 26, 2015 mentioning that it will ensure the payment of delivered quantity of furnace oil within seven days.

It also reminded saying: “A meeting of coordination committee on furnace oil supplies to power sector was also held on March 2015 wherein it was decided that ministry of water and power will ensure the payment of PSO’s current dues as per agreed procedure to enable PSO arrange the uninterrupted supplies. And on top of that the ministry of water and power with the support of finance ministry will come up with the payment mechanism and repayment plan for clearing the backlog due of PSO.”

The letter mentions that the supplies under the agreement were commenced to the power sector were paid from the reference date of February 7, 2015 and the compliance to this effect has really provided much-needed solace to PSO and helped it in deterring further accumulation of circular debt.

However, the ministry has failed to pay the payments that were due since November 26, 2015 owing to which the circular debt of PSO has swelled to Rs139 billion from Rs131 billion as of December 10, 2015.

The letter also tells about the furnace oil supplies started since February 7, 2015 explaining that furnace oil supplies amounting to Rs211.1 billion have been provided to power sector till December 9, 2015, but the amount of Rs203.6 billion has been paid against the supplies from February to November 25, 2015 showing the shortfall of Rs7.6 billion out of which Rs2.9 billion is also paid, but the overdue amount of Rs4.7 billion has not been paid.