KARACHI: Pakistan State Oil has said that its total receivables have reached to Rs179 billion due to non-payments from the power sector and PIA, which may lead to an inevitable breakdown in the supply chain resulting in fuel shortage.
A PSO spokesman on Friday said that despite non-payments the company had struggled to supply fuel worth an average of Rs32 billion to the power entities on a monthly basis. But Hubco, Wapda and Kapco had continuously defaulted on their payment obligations to PSO.
An average monthly shortfall of Rs10 billion had been recorded in payments from the power sector for the past six months, with just Rs5.2 billion being disbursed to PSO in the month of November.
He said a similar situation was occurring with the continuous default by PIA. The national carrier had been violating its agreement with PSO by failing to make regular payments. In national interest PSO had supported PIA in every possible way by borrowing from banks and accommodating PIA’s requests for deferred payments in order to ensure uninterrupted fuel supply to the airline.
The spokesperson said as of today PIA owed Rs4.3 billion to PSO. While their payments had become irregular the carrier increased its daily average fuel upliftment from Rs60 million to Rs70 million worth of product.
The national carrier had promised to pay back Rs1 billion of its outstanding by end of October however, they not only violated this commitment they have recently stopped their daily fuel payments to PSO as well.
“The situation has now reached a critical level as 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,” the spokesman warned.
In case immediate payments are not received by the defaulting entities be it power sector or the national carrier, 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. 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.