Cash-strapped PSO sends SOS to premier, president

PSO’s payables surge to Rs159b; needs Rs45b immediately to retire dues on Jul 25.


Zafar Bhutta July 17, 2011

ISLAMABAD:


As power shortfall surged to 5,169 megawatts (MW) on Saturday prompting country-wide protests over chronic load shedding, the finance ministry refused to assist Pakistan State Oil (PSO).


The majority state-owned oil supplier is feared to default on its payments to local and international suppliers on July 25, bringing the country’s fuel supply chain to a grinding halt.

Total payables of cash-strapped PSO, as of July 15, stand at a whopping Rs159 billion, of which it owes Rs108 billion to international suppliers including the Kuwait Petroleum Corporation.

Clutching at straws

“We have already released six to eight billion rupees and have no more funds to inject into PSO, plagued by circular debt,” Finance Secretary Dr Waqar Masood said.

Sources say after the finance secretary’s refusal, the ministry of petroleum and natural resources approached President Asif Ali Zardari and Prime Minister Yousaf Raza Gilanit to intervene, warning them that a default would plunge the entire country into darkness.

The president and premier have been informed that PSO requires at least Rs45 billion immediately to retire its payables due July 25.

While the minsitry of water and power had pledged to provide Rs18 billion to PSO on July 14, the commitment did not materialise.

The water and power ministry had requested the finance ministry to release Rs20 billion against security deposits of meters but the finance ministry has yet to respond to the request.

Sources, however, say that after petroleum minister Dr Asim Hussain’s intervention, who directed secretary petroleum to move a summary to the finance ministry with copies sent to the prime minister and the president, the finance ministry has said it would release some amount on Monday.

The ministry has not pledged to release the total amount requested though, sources add.

Shortfall

The electricity shortfall in the country on Saturday stood at 5,169 MW as the total power generation was registered at 12,809 MW against the demand of 17,978 MW. While the country has installed capacity of 21,000 MW, a fraction of it is utilised due to inefficiencies in the power sector.

Payables and receivables

As of July 12, PSO had to pay Rs18.833 billion to Parco, Rs6.63 billion to Pakistan Refinery Ltd, Rs9.35 billion to National Refinery Ltd, Rs14.39 billion to Attock Refinery Ltd and Rs3.49 billion to Bosicor.

Meanwhile, PSO was due to receive Rs21.2 billion from Wapda, Rs60.714 billion from Hubco, Rs31.8 billion from Kapco, Rs1.94 billion from PIA, Rs365 million from OGDC, Rs9.061 billion from KESC, Rs957 million from Pakistan Railways, Rs1.38 billion in price differential claims (PDCs) on high-speed diesel and Rs3.62 billion PDC on imported petrol.

PSO has already threatened Kapco and Hubco that it would curtail their furnace oil supply due to rising bills.

PSO is currently supplying furnace oil to power sector amounts to Rs40 billion per month but receives Rs15 billion per month in payments against its provision, resulting in surging circular debt.

Published in The Express Tribune, July 17th, 2011.

COMMENTS (2)

caring sarcasm | 12 years ago | Reply

during musharrafs era pso was a rising star.. fortune 500.. today our democracy is destroying our country!..

Rehmat | 12 years ago | Reply While the country is in the grip of such severe economic crisis on one hand and on attack by the militants on the other, the wonderful politicians are destroying the economic hub of Pakistan with sectarian warfare for the sake of narrow political gains. And what to talk of the army - its India obsession whereby the bulk of tax resources of country are used for defence - prevents investment in social and physical infrastructure.
Replying to X

Comments are moderated and generally will be posted if they are on-topic and not abusive.

For more information, please see our Comments FAQ