ISLAMABAD: Like record-making Karachi Stock Exchange, the receivables of Pakistan’s largest firm by revenue — Pakistan State Oil — are touching historic peaks.

As of Nov 19, the receivables of the state-run PSO touched Rs238 billion, highest-ever in its history.

The company’s previous record of highest receivables was of Rs220bn in May last year, ahead of a major Rs480bn circular debt settlement, a senior company official told Dawn.

The company has committed more than a dozen of domestic and international defaults in a week – another record.

The company’s spokesperson made no comments and managing director’s close aides said their boss was on a visit abroad.

The banking sector has also stopped extending credits, refineries are declining product uplifting and international supply orders are being delayed, the official said.

He said the company has been committing a series of defaults, but since Nov 12, it hit about a dozen defaults of over Rs19bn, including four to international suppliers.

Some of the major defaults included Rs2.6bn on Nov 12 to Muslim Commercial Bank, Rs4.6bn to NIB Bank on Nov 13, followed by a few others on Nov 17 to National Bank, Habib Bank and United Bank. This was in addition to Rs6bn default to refineries.

The company has repeatedly written to the government that it was on brink of collapse and supply line would come to a halt if a minimum of Rs35bn were not paid immediately.

On top of that, the acting managing director of PSO has traveled to Qatar to negotiate a contract for import of liquefied natural gas as its core business of oil supplies and sales move into sinking phase.

All this is happening to a company that declared Rs41bn operating profit for the fiscal year ending June 30 as it sales revenue touched Rs1.41 trillion.

PSO’s total assets are now valued at Rs313bn against its total liabilities of around Rs294bn (as of end June 2014).

Of the total receivables of Rs238bn, major defaulters included ex-Wapda’s generation companies with Rs113bn, followed by Hubco Power with Rs68bn, Kapco’s Rs29bn and Pakistan International Airlines’ (PIA) Rs12bn.

A threat by PSO to PIA for suspending oil supplies last weekend led to intervention by the Finance Minister, Ishaq Dar, and the Petroleum Minister, Shahid Khaqan Abbasi, that promised Rs2bn payments within two days. After four days, not a single penny has been paid by the PIA, said a senior official.

He said the ministry of finance was arranging a Rs12bn loan from a consortium of banks for PIA that had not yet materialised. As a consequence, the chief financial official (CFO) of PIA is reported to have threatened to stop supplies to ATR planes, but top functionaries in the federal capital pressed PSO once again to linger on.

As a consequence, the L/Cs for further shipments of furnace oil and other products are getting delayed.

“The situation has reached a stage where even National Bank of Pakistan has declined to open a letter of credit (L/C) for oil imports. We have given a number of SOS messages to the government that we are at the brink of collapse and need Rs35bn to settle past defaults,” said the official.

After an effort spread over 10 days, the ministry of finance released Rs15bn to the Pakistan Electric Power Company (Pepco) for onward payment to PSO on Wednesday.

Published in Dawn, November 20th , 2014