New govt required to avert fuel stock crisis

ISLAMABAD: The fuel stock situation for power generation is likely to aggravate in the country as the PTI ousted government did not release Rs25 billion to the Pakistan State Oil, required to open LCs for importing diesel and furnace oil in the wake of failure of Pakistan LNG Limited to ensure the import of LNG for power sector.

A top official source said that Economic Coordination Committee (ECC) that met on April 1, 2022 with Finance Minister Shaukat Tarin in the chair approved the supplementary grant of Rs25 billion to address the liquidity constraints of PSO for avoiding instant disruption in LNG and oil supply chain, but that amount has not yet been released even after the lapse of 10 days.

When contacted, one of the top officials of PSO confirmed it, saying the Finance Division has not yet released Rs25 billion approved by the ECC on April 1, 2022. He said the amount was not released since the decision of ECC was not ratified by the federal cabinet.

It is to be noted that the meetings of the federal cabinet didn’t take place for more than one month since the submission of the non-confidence motion. The cabinet meeting that took place on April 9 at 9:30pm didn’t approve the ECC decisions, including the release of Rs25 billion to PSO to ensure the smooth import of fuel required for April and May.

“We are expecting the release of the said amount as soon as the new government is installed,” the PSO official said. “We had asked for the release of Rs60 billion to ensure import of 23 fuel cargoes to cater to energy needs for April. If the said amount is not made available, then PSO will not be able to open new LCs,” a spokesman of the PSO said.

He further went on to say that the company earlier planned to import 17 fuel cargoes for April, which included seven LNG cargoes, three furnace oil, at least six diesel and five motor gasoline cargoes. But with Gunvor backing out from providing four LNG cargoes and failure of PLL to procure LNG from the spot market for April, the government wants to import more furnace oil to be used for electricity generation.

But the ECC on April 1, 2022 approved the amount of Rs25 billion, which is not up to the mark keeping in view the aggravating liquidity crisis of PSO, the official said. According to the receivables and payables position of PSO as of April 05, 2022, the circular debt of PSO has increased to Rs719.441 billion, with receivables at Rs516 billion and payables at Rs203.441 billion.

Keeping in view the perpetual increase in circular debt of the entity, it is no longer possible for PSO to provide LNG to SNGPL and fuel to the power sector without the release of substantial amount from the federal government. SNGPL is required to pay Rs283 billion to PSO in the head of import of LNG. The power sector owes PSO Rs167.177 billion and PIA Rs22.479 billion. PSO is also required to be paid Rs8.9 billion in the head of price differential claims due in the period 1996-2014 and Rs21.6 billion also in the head of price differential claims for financial year 2022. PSO is also required to be paid Rs13.250 billion in the head of foreign exchange rate differential on FE loan.

Coming to the payables, PSO is required to pay Rs33.641 billion to six refineries and Rs169.8 billion in the head of LCs against the fuel import from Kuwait Petroleum Company and LCs for import of LNG.