ISLAMABAD: International suppliers have walked out of bidding to provide liquefied natural gas to Pakistan State Oil (PSO) because of its overexposure to the new business as the total receivables of the country’s largest firm broke all past records.
A senior PSO executive told Dawn on Tuesday that its major ‘authenticated’ receivables have gone beyond Rs253 billion as of July 30, 2015 including around Rs30bn of stuck up funds in the LNG business alone.
He said the PSO’s previous record was of Rs238bn receivables in November that led to country-wide petrol crisis in January. The receivable from the public sector companies of the power ministry at the time stood at Rs113bn which have now reached Rs124.3bn as of July 30. Total power sector receivables are now at Rs200bn.
Receivables of the country’s largest firm have gone beyond Rs253bn
“Around Rs29bn was long overdue against Sui Southern Gas Company Ltd on account of LNG supplies by the PSO,” said the official. He said PSO had already committed a number of defaults on its payments to its suppliers, as a result.
The supply chain situation even now was not stable, he said, adding that even though total product stocks may be more than 10 days but its supply was not stable as witnessed on Monday in parts of Rawalpindi and Islamabad.
“Like always, power sector mostly in the public sector is the major culprit behind liquidity crisis of the country’s largest fuel supplier, but LNG has effectively broken our back”, he said and lamented the leadership gap to take up crisis situation with the prime minister.
Prime Minister Nawaz Sharif had sacked entire top hierarchy including the then acting managing director and board of directors of the of the largest firm (by revenue) amid petrol crisis in January this year and since then the government has been running PSO on ad hoc basis and without any leadership and the board.
The government had appointed Imran-ul-Haque of Engro Elengy Terminal about three months ago as managing director of PSO but he has so far stayed away.
Another acting MD Shahid-ul-Islam who was also looking after Government Holdings Private Limited (GHPL) had moved to UK two weeks ago amid legal controversy around his induction and the petroleum ministry’s attempts to grant him a record Rs5 million per month salary package.
The PSO executive said the two international firms — Gunvor of UK and Dutch Trafigura — had purchased bid documents for supply of four LNG ships in September but withdrew their bids on the bid opening date i.e. July 27 in Karachi.
The official said the PSO had so far imported a total of eight LNG ships after the completion of Engro’s terminal in April this year on temporary basis on-spot purchase basis and six of them were arranged from Qatar on goodwill basis and two others were supplied by private parties.
Qatar has since declined to continue ‘temporary business’ without prior standby letter of credit (SBLC) which the ministries of petroleum, power and finance failed to arrange due to internal rifts.
The last ship carrying LNG was delayed for two weeks following refusal by the shipping authorities to allow its berthing because the prime minister had given permission for import of only four shipments. Another special permission was secured from the prime minister for another four ships.
In the absence of the board of directors and a full time managing director, PSO is being looked after by Yaqoob Suttar on additional charge on verbal orders of the petroleum ministry.
PSO has supplied around Rs800bn worth of fuel in a year to the power sector, including Rs360bn to power companies of Ministry of Water and Power, Rs240bn to Hubco and Rs199bn to Kapco. The distribution companies of Wapda had collected about Rs1.265 trillion and about 18 per cent was provided to PSO through at source bank adjustment.
Published in Dawn, August 5th, 2015