PSO in hot waters, needs Rs 87.4b bailout aid

Shah Hasan

Islamabad—Pakistan State Oil a state owned entity, which is responsible to provide furnace oil to all thermal powerhouses and other POL products to the main players in the energy sector is in hot water because of the financial constraints and may default by October 30 on the 17 letters of credit.

“Yes, we are in a mess and facing acute shortage of financial resources and unable to get the orders booked to cater for the future POL needs of the country. This has prompted us to defer import of 4 fuel cargos, which were due in late September”, a senior official told Pakistan Observer.

“The Pakistan State Oil’s receivables have swelled to huge amount of Rs 87.4 billion as Hub Power Company (Hubco) owes to pay Rs 41.3 billion to PSO, Kot Addu Power Company (Kapco) Rs 20.5 billion and Pakistan Electric Power Company (Pepco) Rs 23.6 billion, but the government is inclined to pay Rs 41.2 billion to PSO today (Friday) which is not good enough keeping in view the amount of receivable that stands at Rs 87.4 billion.”

Mentioning about the payment against the Letters of credit that PSO has opened, the official said that an amount of Rs 20.2 billion was badly needed to avoid the default of 7 L/Cs under which the oil was to be imported between September 29 and October 12.However, the state owned entity also needs an amount of Rs 54.8 billion for the 17 L/Cs under which the oil is to be imported between September 24 and October 30 period.

To a question the official said if PSO was given Rs 41.2 billion by today (Friday), then the said amount would be able to cater for the financial needs for the L/Cs up to September 28.

To a question, the official said that oil reserves stock is enough to cater for oil needs of the country for 18 days, but if the sorrow state of affairs continued unabated, then this stock would be reduced manifold which was quite dangerous for Pakistan’s economy which was already under duress.

“Owing to the depressing situation and dearth of required finances, the country’s refineries are also running at 50 per cent of the production capacity.” Link...