Power crisis in the pipeline as cash flow stagnates

Shahrukh Syed


The cash flow constraints have adversely hit Pakistan’s power sector which may trigger to a full fledge power crisis in the country, reveals the official document available Pakistan Observer.
The power sector is experiencing the unsustainable financial burden just because of the subsidy non payments and non-settlement of GST refunds. And prime minister has been sensitized about the financial constraints of power sector.
The cash flow crisis in power sector has stemmed out of the non-provision of the huge amount of Rs283.17 billion that the finance ministry requires to pay in the heads power sector subsidy and general sales tax refund.
The communication of Cabinet Committee on Energy unfolds that the power sector subsidies have so far accumulated to Rs174.97 billion, resulting in non-payments to IPPs in the ongoing financial year along with increase in the payables of PSO. The amount in the head of GST that is needed to be refunded stands at Rs108.2 billion. And the burden of Rs283.17 billion (Rs174.97 billion of outstanding subsidies d Rs108.2 billion GST refunds) is now becoming unbearable cash flow constraints which is bound to lead full fledge crisis, if not resolved on priority.
Meanwhile, the state owned Pakistan State Oil’s economic miseries are on the rise as the power sector alone needs to pay whopping Rs224 billion to the entity and to this effect asked for immediate payment of Rs30 billion to avoid untoward situation.
The top management of oil marketing company in a letter to finance ministry, of which the copy is available Pakistan Observer, has told the government in plain words that the entity is facing is the severe liquidity crunch and has utilized its all borrowing lines to the maximum and is unable to get more credit lines to ensure the continuation of its operations.
More importantly, in its latest correspondence with secretary finance, PSO has also asked for finance ministry’s intervention for payment of dues of Rs14.454 billion which Pakistan International Airlines (PIA) owes to pay.
The letter mentions that PIA is repeatedly defaulting on its payment obligations. Though, the repeated commitments have been made by PIA to reduce the outstanding dues, still they are failing to maintain the daily upliftment payments. PSO also told finance ministry as it is already facing the liquidity crunch and non-payment by PIA is aggravating the situation more. And it is getting for PSO to maintain the supply chain throughout the country for uninterrupted PIA operations.

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