Unbridled circular debt continues to haunt PSO

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Receivables alarmingly swell to whopping Rs260.5b

Shahrukh Syed

Islamabad

The unbridled surge in circular debt continues to haunt Pakistan State Oil as the receivables of the state owned oil marketing company has swelled enormously to Rs260.5 billion and payables reach at Rs61 billion.
According to receivable and payable position of PSO as of today (January 19, 2017) available with Pakistan Observer, it is none other than the power sector, which continues to be the black hole in the economy, owes to pay Rs233.4 billion to Pakistan State Oil. On account of delay in payments, the inefficient power sector, out of Rs233.4 billion.
In the power sector, electric power generation companies (Gencos) are needed to pay Rs134 billion, Hub Power Company (HUBCO) Rs69.4 billion, Kot Addu Power Company (KAPCO) Rs21.9 billion, Saba power and Southern Electric Rs0.1 billion and K. Electric owes to pay Rs0.9 billion. And the amount payable to PSO in the head of price differential of high sulpher furnace oil and low sulpher furnace oil.
Pakistan International Airlines (PIA) has also emerged as a headache for Pakistan State oil as receivables from PIA has also surged to R14.5 billion.
More importantly, in its latest correspondence with secretary finance, PSO has also asked for finance ministry’s intervention for payment of dues of Rs14.4 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.
Meanwhile power sector is experiencing the unsustainable financial condition 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, reveals a communication of cabinet committee on energy of which copy is also available with Pakistan Observer.
And the amount in the head of price differential claim from the government has also hiked to Rs9.6 billion. However, receivables from Sui Northern in the head of LNG stood at Rs3.1 billion.
However, the payables of Pakistan State Oil have also increased to Rs61 billion out of which it is needed to pay Rs10.1 billion to refineries. Out of Rs10.1 billion, PSO owes to pay Rs5.8 billion to Pak Arab Refinery Company (PARCO), Rs1.1 billion to Pakistan Refinery Limited (PRL), National Refinery Limited (NRL) Rs0.7 billion, Attock Refinery Limited Rs1.7 billion, Byco Rs0.2 billion and ENAR Rs0.5 billion. And in the head of letter of credit for fuel supplies from Kuwait Petroleum Company and standby letter of credit for LNG supplies, PSO is to pay huge amount of Rs50.9 billion.

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