PSO’s economic miseries touching new high

ISLAMABAD: Pakistan State Oil (PSO) has started feeling the heat as its economic woes are touching new high mainly because of the breach of the 7-day credit agreement that was signed on February 2015 with Ministry of Water and Power.

Under the agreement, the current dues were to be paid by Pakistan Electric Power Company (Pepco) within 7 days but the accord was not being adhered to and the default amounthad swelled to Rs4.5 billion since February 2015. However, the volume of the outstanding amount for the fuel supplies to the state-run power sector stood at Rs190 billion before February 2015 and the said amount had also not been paid so far, reveals the latest letter of PSO written to Ministry of Water and Power of which copy is available with The News.

This ugly development has factually multiplied the economic miseries of the PSO. So much so, another state run entity Sui Northern has also failed to pay Rs8.7 billion in the head of provision of LNG. The circular debt, this means, continues to haunt the financial health of Pakistan State Oil, the relevant officers of the entity commented on the new scenario when they were contacted by The News.

The letter also divulges that the default amount to be paid by the Pepco is increasing as it has paid the negligible amount of Rs700 million till now since February 13, 2015. And similarly, Sui Northern paid just Rs680 million on February 16, 2016 and the last LNG cargo of Rs2.9 billion was invoiced on the same date.

The receivables and payables position as on February 9, 2016 also paints the gloomy picture about the financial health of Pakistan State Oil saying that the receivables of the entity have surged up to Rs227.5 billion whereas its payables stand at Rs44.5 billion.

The details show that Pepco owes Rs115.8 billion to PSO, Hubco Rs59.1 billion, Kot Addu Power Plant (Kapco) Rs13.3 billion, Saba Power and Southern Electric Rs0.4 billion, K-Electric Rs0.7 billion and WPPO Rs8.5 billion. In addition to that Pakistan International Airlines (PIA) is also needed to pay Rs13.4 billion. PSO is also entitled to get Rs9.6 billion in the head of price differential claims from the government of Pakistan. So much so, Sui Northern owes Rs6.6 billion. In the wake of the cash flow crisis, PSO is unable to pay Rs3.7 billion to Pak-Arab Refinery Company (PARCO), Rs8.4 billion to Pakistan Refinery Limited, Rs1.2 billion to National Refinery Limited (NRL), Rs8.3 billion to Attock Refinery Limited (ARL), Rs0.4 billion to Byco and Rs1 billion to ENAR. Moreover, PSO is unable to pay Rs20.9 billion against the letter of credit and payments to Kuwait Petroleum Company. PSO also finds itself in a difficult position to pay Rs0.6 billion to Port Qasim Authority.