ISLAMABAD: The Ministry of Petroleum and Natural Resources has sought intervention of Prime Minister Nawaz Sharif to stave off imminent default on the part of oil and gas supplying companies as their receivables from power producers swell to Rs338 billion, sparking fears of disruption to the entire supply chain.
In a summary, the petroleum ministry also asked the premier to direct the Ministry of Water and Power to immediately release the money for clearing the dues of oil and gas suppliers, according to officials who were aware of the development.
Power producers have delayed payments to the oil and gas suppliers and the amount has swelled to Rs338.37 billion.
Pakistan State Oil (PSO) is the only state-owned oil marketing company and is also the largest supplier of fuel to the power producers. In order to facilitate power generation without any hiccup and to minimise outages in the country, PSO says it is supplying fuel to the power companies on government’s instructions.
PSO’s receivables from the power companies stand at Rs228.20 billion including receivables from SNGPL on account of liquefied natural gas (LNG) supply.
On the other hand, Sui Southern Gas Company (SSGC), Sui Northern Gas Pipelines Limited (SNGPL), Oil and Gas Development Company (OGDC) and Pakistan Petroleum Limited (PPL) are providing gas to the power producers, but their receivables have reached unsustainably high levels.
The sorry state of affairs have undermined liquidity position of the public sector oil and gas companies and any further delay in payments can lead them to default on payment obligations to local and foreign oil suppliers, resulting in disruption to the entire supply chain.
In order to improve the liquidity position of the public sector oil and gas companies and to avert any untoward situation, the Ministry of Water and Power may be directed for early settlement of the dues, the petroleum ministry said in a summary sent to the Cabinet Committee on Energy, chaired by the prime minister.
According to the breakdown, power producers owe Rs55.96 billion to OGDC, Rs28.18 billion to SNGPL, Rs19.27 billion to PPL and Rs8.76 billion to SSGC.
PSO is to receive Rs19.8 billion from power generation company (Genco) 1, Rs110.9 billion from Genco 3, Rs66.4 billion from Hub Power Company and Rs20 billion from Kot Addu Power Company (Kapco).
Government Holdings Private Limited is a major defaulter of OGDC and has to pay Rs49.4 billion and PPL is to receive Rs19.27 billion from Genco 2.
Pepco is a major defaulter of SNGPL and has to pay Rs17.83 billion on account of gas supply. SNGPL is also to receive Rs3.33 billion from power producers on account of re-gasified LNG supply.
Published in The Express Tribune, February 1st, 2017.
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