0
KARACHI: Pakistan State Oil (PSO) warned on Friday to stop fuel supply to defaulting customers until outstanding receivables are recovered.
According to a statement, the huge outstanding, caused by non-payments from the power sector and airline, has maimed company's liquidity position.
The piled up huge receivables of Rs 179 billion have crippled company's liquidity position which may lead to an inevitable breakdown in the supply chain resulting in fuel shortage in the country.
Despite repeated non-payments from power sector, PSO has somehow managed to supply fuel worth an average of Rs 32 billion to the power entities on a monthly basis.
The power sector entities namely Hubco, Wapda and Kapco have continuously defaulted on their payment obligations to PSO. An average shortfall of Rs 10 billion per month has been recorded in payments from the power sector for the past 6 months, with just Rs 5.2 billion being disbursed to PSO in the month of November.
PSO said that a similar situation is occurring with the continuous default by PIA. The national carrier has been violating its agreement with PSO by failing to make regular payments for the fuel it receives.
Keeping in view the national interest, PSO had supported PIA in every possible way including borrowing from banks and accommodating PIA's requests for deferred payments in order to ensure uninterrupted fuel supply to the airline.
As of today, PIA owes PSO Rs 4.3 billion, while their payments have become irregular and the carrier has increased its daily average fuel upliftment from Rs 60 to Rs 70 million worth of product.
The national carrier had promised to pay back Rs 1 billion of its outstanding bills by the end of October, however, they not only violated this commitment, but they have recently stopped their daily fuel payments to PSO as well.
The situation has now reached a critical level and the continuous non-payment by these entities has left PSO cash-strapped and unable to meet its payment obligations to both local and international suppliers.
If immediate payments are not received from the defaulting entities, be it power sector or the national carrier, the import of future fuel cargoes will have to be deferred as the company has exhausted its financing resources.
With domestic production of fuel oil already in doldrums, any reduction in import would result in fuel shortages, increased load shedding and disruption of flight schedules nation wide, PSO said.
Faced with this situation PSO will be left with no choice but to discontinue supplies to any defaulting customer until its outstanding receivables are recovered.
