KARACHI, Oct 16: While the liquidity position of Pakistan State Oil (PSO) is already at a critical level, two local refineries have sent an SoS to the state-run oil company to make payments to avert default on their letters of credit (LCs).

Pakistan Refinery Limited (PRL) and Pak Arab Refinery Limited (Parco) had cautioned the PSO as it started delaying the payments to the refineries.

PSO has been forced to delay the payments to the local refineries of about Rs68 billion (including the amount of two refineries) since it has not received huge funds from various parties in shape of price differential claims (PDC) from the government and from independent power producers (IPPs).

The cash flow position of the PSO is getting serious as it is facing problems in making payments of Rs31 billion to foreign suppliers, which it has to make in the next 15 days.

PSO Managing Director Kalim A. Siddiqui has informed the finance ministry, Wapda and ministry of petroleum and natural resources on Oct 14 that the banks are also pressing the company to reduce its current overdraft level of Rs26.8 billion and have increased the interest rates as they are facing liquidity crisis.

The company’s liquidity position is at alarming stage owing to significant accumulation of receivables from the government in terms of PDC amounting to Rs20 billion followed by recovery of Rs15.7 billion from Wapda, Rs30 billion from Hubco, Rs3.6 billion from Pakistan International Airlines and Rs5.8 billion from Kapco.

The PSO chief has asked the ministry of petroleum to advise the ministry of water and power for taking swift measures to clear the outstanding amount. Keeping in view of high energy demand of the country, there was a need to take urgent measures, he added.

He sought immediate action to release all the amounts overdue to the PSO as it will help in avoiding the disruption of supply chain of petroleum products in the country.