PSO fears oil supply disruption, seeks swift action
Its receivables from clients touch all-time high at Rs281b
PHOTO: RIAZ AHMED/EXPRESS
ISLAMABAD:
Pakistan State Oil (PSO) - the state-owned oil marketing major - has warned the government of disruption in oil supply in the near future, citing scarce financial resources for the company in the face of runaway circular debt in the energy chain.
PSO’s receivables from different clients have swelled to Rs281 billion, an all-time high during the tenure of current government.
It has sent a letter to the ministries concerned as well as the prime minister, seeking immediate action. It is demanding prompt release of Rs107 billion to avoid default on payments to oil suppliers.
Power consumers across the country had already started experiencing prolonged load-shedding for eight to 15 hours with the beginning of warm weather as energy shortfall widened to 4,700 megawatts on Thursday.
According to PSO, furnace oil has been imported for the independent power producers (IPPs), but they are reluctant to lift the cargo. As a result, payments have been blocked and orders for more fuel consignments cannot be made for upcoming months.
“This letter should be considered an SOS (Save Our Soul) call by PSO as default is looming, which will impact supply chain in the country,” PSO said in the communication sent to the finance, petroleum and power ministries.
It pointed out that the demand for furnace oil had dropped significantly, standing at 12,500 tons compared to December 29, 2016 when consumption needs stood at 16,500 tons.
Since PSO had already planned imports according to the demand received in December 2016, four cargoes of High Sulphur Fuel Oil (HSFO) comprising 260,000 tons were lined up while one cargo of Low Sulphur Fuel Oil (LSFO) carrying 55,000 tons was awaiting discharge at the port.
“IPPs be directed to increase their inventory as per requirement and it is to be noted that stocks will not be reduced significantly from the current level by month-end due to ordered volumes,” PSO said.
Given the inventory at hand, current consumption levels at all power plants and four cargoes already lined up, PSO has not ordered consignments for April and may not book cargoes for May as well.
“It is also of serious concern that the Ministry of Water and Power is not paying PSO in line with the agreed seven-day credit arrangement,” the company said.
Since February 7, the net outstanding amount under the seven-day credit arrangement has gone up to Rs40.4 billion.
In line with the oil demand for the next three months, PSO said it needed an estimated additional payment of Rs63.4 billion. By June, it required a total of Rs107.9 billion including dues of Rs40.4 billion under seven-day credit, Rs63 billion for oil supply and an additional Rs4.1 billion.
PSO’s receivables from Sui Northern Gas Pipelines for the supply of re-gasified liquefied natural gas (RLNG) have also gone up to Rs15 billion since July 2016.
Published in The Express Tribune, April 14th, 2017.
Pakistan State Oil (PSO) - the state-owned oil marketing major - has warned the government of disruption in oil supply in the near future, citing scarce financial resources for the company in the face of runaway circular debt in the energy chain.
PSO’s receivables from different clients have swelled to Rs281 billion, an all-time high during the tenure of current government.
It has sent a letter to the ministries concerned as well as the prime minister, seeking immediate action. It is demanding prompt release of Rs107 billion to avoid default on payments to oil suppliers.
Power consumers across the country had already started experiencing prolonged load-shedding for eight to 15 hours with the beginning of warm weather as energy shortfall widened to 4,700 megawatts on Thursday.
According to PSO, furnace oil has been imported for the independent power producers (IPPs), but they are reluctant to lift the cargo. As a result, payments have been blocked and orders for more fuel consignments cannot be made for upcoming months.
“This letter should be considered an SOS (Save Our Soul) call by PSO as default is looming, which will impact supply chain in the country,” PSO said in the communication sent to the finance, petroleum and power ministries.
It pointed out that the demand for furnace oil had dropped significantly, standing at 12,500 tons compared to December 29, 2016 when consumption needs stood at 16,500 tons.
Since PSO had already planned imports according to the demand received in December 2016, four cargoes of High Sulphur Fuel Oil (HSFO) comprising 260,000 tons were lined up while one cargo of Low Sulphur Fuel Oil (LSFO) carrying 55,000 tons was awaiting discharge at the port.
“IPPs be directed to increase their inventory as per requirement and it is to be noted that stocks will not be reduced significantly from the current level by month-end due to ordered volumes,” PSO said.
Given the inventory at hand, current consumption levels at all power plants and four cargoes already lined up, PSO has not ordered consignments for April and may not book cargoes for May as well.
“It is also of serious concern that the Ministry of Water and Power is not paying PSO in line with the agreed seven-day credit arrangement,” the company said.
Since February 7, the net outstanding amount under the seven-day credit arrangement has gone up to Rs40.4 billion.
In line with the oil demand for the next three months, PSO said it needed an estimated additional payment of Rs63.4 billion. By June, it required a total of Rs107.9 billion including dues of Rs40.4 billion under seven-day credit, Rs63 billion for oil supply and an additional Rs4.1 billion.
PSO’s receivables from Sui Northern Gas Pipelines for the supply of re-gasified liquefied natural gas (RLNG) have also gone up to Rs15 billion since July 2016.
Published in The Express Tribune, April 14th, 2017.