ISLAMABAD: Amid worsening cash flows of Pakistan State Oil and over Rs32 billion of foreign liabilities due within this month against oil imports, a meeting presided over by Prime Minister Raja Pervez Ashraf on Thursday decided to raise about Rs80 billion from the banking sector.

The decision came following a warning by the Ministry of Petroleum and Natural Resources of serious fuel shortage in the coming weeks unless PSO was paid at least Rs32 billion to take care of its foreign liabilities before the end of July.

Sources said the petroleum ministry warned the government of an imminent shortage of furnace oil and other petroleum products unless it was paid three instalments of Rs12 billion each within a week in view of PSO’s receivables going beyond Rs230 billion.

It was of the view that financial position of PSO had reached a stage where it would not be possible to ensure supply of 28,000 tons of furnace oil per day for power generation and in fact the petrol pumps would start drying up after a few days.

Dr Asim Hussain, the Adviser to the Prime Minister on Petroleum and Natural Resources, however, did not agree that his ministry had sought Rs12 billion on a daily basis.

He told Dawn that in a letter to the prime minister he had demanded of the government to take care of Rs32 billion worth of letters of credit becoming due within this month.

He agreed that the PSO was facing extremely difficult situation and added that it was providing 28,000 tons of furnace oil on a daily basis on the directives of the prime minister.

He said the shortage of petroleum products was not an immediate concern, but in case of shortage of consumer products the PSO would have to stop supplying furnace oil.

He said today’s meeting decided in principle to start importing liquefied natural gas to meet fuel requirements and expedite diversion of natural gas to the power sector. The petroleum ministry was directed to submit a detailed position paper on LNG import within two days.

The prime minister directed the ministry of law to remove legal hurdles in the launch of about Rs80 billion term finance certificates (TFCs) on behalf of the Oil and Gas Development Company and Central Power Purchase Agency to reduce the size of inter-corporate circular debt that exceeded Rs500 billion on July 10.

The amounts so raised would be used through book adjustment among the energy sector companies to dilute the circular debt.

A statement issued after the meeting confirmed for the first time that electricity shortfall had reached 8,000MW a few days ago.

It said the prime minister appreciated the efforts of the ministries of water and power and petroleum “to reduce the shortfall from 8,000MW to around 4,000MW”, adding the people throughout the country were feeling the difference.

He directed the petroleum ministry to ensure uninterrupted fuel supply to the power sector.