ISLAMABAD: With outstanding arrears against Pakistan International Airlines (PIA) piling up over Rs11billion, Pakistan State Oil has sought permission from the federal government to “immediately discontinue fuel supplies to the national flag carrier.

A letter to the Ministry of Petroleum and Natural Resources – a copy of which is available with DawnNews – disclosed on Saturday that PSO has sought permission to immediately discontinue fuel supplies to PIA.

Though arrears against PIA have built up to over Rs11bn, state-owned oil company PSO has been continuing fuel supply to PIA in compliance with directives of the petroleum ministry.

PSO has also informed the government in detail regarding the default on due payments by PIA.

The oil company in its letter further says that in view of its liquidity position, it has become hard for PSO to continue supplies unless outstanding receivables are paid by PIA.

Several meetings have been held with PIA management to resolve the issue, including a meeting between senior management of PIA and PSO on Sept 15 at PIA’s offices followed by a meeting on Sept 25 at the PSO head office, states the letter.

“During these meetings, PIA expressed its inability to pay the outstanding dues because of its ongoing cash flow problems. PSO also pursued the matter through MPNR (Petroleum Ministry) but the situation could not improve despite the ministry’s support. In process of pursuing the recovery, PSO management learnt that PIA has discontinued its receivables from profitable routes from the banks and any further credit facility is not an option for PIA for settlement of PSO dues,” it says.

The letter also claims that under these circumstances, PSO is left with no option but to immediately discontinue the fuel supplies to PIA.

“In view of the standing instructions of the government for continuation of fuel supply to PIA despite payment default and considering the situation outlined above with respect to PIA’s inability to pay and PSO’s inability to arrange further supplies, your permission is solicited for PSO to discontinue supply of fuel to PIA,” reads the letter.

When contacted, PSO spokesman, Mariam Shah, declined to comment on the matter.

PIA officials were also unavailable for comment regarding the matter.