PSO seeks immediate release of Rs 50 billion

Tuesday June 16, 2009

ISLAMABAD: The Pakistan State Oil (PSO) has requested the government to immediately release Rs 50 billion to enable it to continue to supply fuel in the country. Sources told Business Recorder that it is the second letter which PSO management has written to Petroleum Ministry and to other concerned ministries to bail it out of its financial crisis.

Earlier, PSO management had requested for the release of Rs 30 billion. That was not entertained due to Finance Ministry's reluctance. PSO has informed the Petroleum Ministry and others that if its letters of credit (LCs) defaulted, it would face serious problems in placing an order for oil imports in future. PSO credibility would be badly affected and it would lose market's confidence.

Sources said that Petroleum Ministry approached the Finance Ministry several times to arrange for the money for PSO but no positive measure has been taken so far by Finance Ministry in this regard. PSO management has warned the government that its LCs to import oil may default due to non-availability of money, and has urged the government to release funds immediately.

PSO dues against different clients have mounted to Rs 81.009 billion, putting heavy burden on the company. PSO is the major supplier of furnace oil to power sector that is to recover Rs 20.292 billion from Water and Power Development Authority (Wapda), Rs 32.253 billion from Hubco, Rs 20.046 billion from Kapco and Rs 2.736 billion from PIA. PSO is to recover Rs 5.092 billion price differential claims (PDCs) on petroleum products from the government.

Sources expressed fear that the country may undergo a serious oil and power shortage if PSO fuel supply is disturbed due to cash problems. PSO is depending on oil imports due to lower production of oil refineries, while refineries are also facing financial problems attributed to the circular debt.

Owing to non-payment of dues by the power sector, PSO has defaulted to oil refineries. PSO is to pay Rs 62.023 billion to oil refineries, Rs 30.221 billion to Parco, Rs 9.698 billion to PRL, Rs 9.187 billion to ARL, Rs 7.871 billion to NRL and Rs 5.046 billion to Bosicor on the fuel supply.


(BRecorder)