PSO may halt supply to Pakistan Railways

KARACHI: Pakistan State Oil (PSO) has warned that it will discontinue supplies of oil to Pakistan Railways (PR) if the latter remains unable to clear its outstanding dues for fuel purchases.

In a letter dated February 17, PSO said it would be “constrained to halt supplies to Pakistan Railways from February 21 onwards.” Copies of the letter were forwarded to federal ministries of petroleum and railways, along with relevant departments of PR.

The official communique highlighted that the Railways currently owes more than Rs1.01 billion to the oil marketing company. PSO also said that “the dishonouring of cheques issued by Pakistan Railways has now developed into a standard feature, costing millions on account of financial charges and severely affecting the cash flow position of the company.”

“Just to support the Railways and keep its wheels moving, PSO supplied 700,000 litres of diesel and 21,000 litres of lubricants on Monday,” said a PSO spokesperson. “However they have been urged to settle their dues as soon as possible to avoid any disruptions in fuel supply,” she added.

PSO defers imports

The PSO management has deferred imports of various petroleum products, including high speed diesel, jet fuel and low speed diesel for March and April, due to financial constraints, a company official said.

The official revealed that large-scale consumers, such as Water and Power Development Authority (Wapda), Hub Power Company (Hubco) and Kot Addu Power Company (Kapco) owe the oil marketing company around Rs158 billion.

Industry sources revealed that fuel supplies available with local refineries are already low and that extended delays in the import of crude oil by PSO could cause a dry-out situation at the country’s airports and strain supplies to the power sector.

Published in The Express Tribune, February 22^nd, 2011.