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KARACHI: With total receivables reaching an alarming figure of Rs155 billion the financial situation of Pakistan State Oil (PSO) has become extremely precarious.
The huge outstanding is adversely effecting PSO’s liquidity and it may lead to inevitable breakdown in the supply chain resulting in fuel shortages in the country, PSO said in a statement on Monday.
Despite severe financial constraints, PSO struggles to live up to its commitment to ensure uninterrupted supplies to the entire country especially the power sector. However, the power sector owes PSO an aggregate amount of approximately Rs131 billion. Of these Hubco owes PSO Rs67 billion, whereas Kapco and Wapda owe Rs35 billion and Rs29 billion respectively.
The PSO is supplying an average of Rs32 billion worth of fuel to the power sector on a monthly basis, the power sector continuously defaults on its payment obligations to PSO.
This month the power sector gave paltry Rs8.5 billion as payment for the fuel oil supplied to them. In the recent past, the company has sent out requests for payments to the power entities including Hubco, Kapco and Wapda, however, no substantial payment had been released in September 2011.
The continuous non-payment of power sector has made PSO severely cash-strapped. As a result, the company has defaulted on local refineries payments this month which has adversely affected the local production.
Furthermore, the company is constantly struggling to meet the international payment obligations as any default on the part of PSO to its international suppliers would disrupt supplies and the resumption of which would take months. In case timely payments are not received from the power sector in the near future, fuel cargoes will have to be deferred as PSO has exhausted its resources for financing future product supplies. With domestic production of fuel oil already in doldrums, a reduction in import would result in shortage of fuel and increased load shedding nationwide.
