Ministry releases Rs7.5b for paying some circular debt

PSO uncertain whether it will get anything given its huge Rs296b receivables

ISLAMABAD: The Ministry of Finance has provided Rs7.5 billion for the Central Power Purchasing Agency (CPPA) to clear some of the debt in the energy chain, but Pakistan State Oil (PSO), whose receivables have touched Rs296 billion for oil supplies, is uncertain whether it will receive anything.



According to officials, earlier the Cabinet Committee on Energy had decided that the Ministry of Water and Power would help arrange Rs17 billion for PSO, out of the planned fresh borrowing of Rs41 billion by the government.

The remaining amount was to be allocated to the independent power producers (IPPs) in an effort to ease the impact of ballooning circular debt.

“We do not believe that the CPPA will release anything for PSO out of Rs7.5 billion,” a senior official of the Ministry of Petroleum and Natural Resources said. “PSO is encountering difficulties in continuing oil supplies because of the growing circular debt.”

Power generation touched the highest level at 19,244 megawatts on June 3, of which 13,000MW was produced through thermal sources, 6,000MW from the hydel source and the rest from other sources.

With more than 67% of power generation from thermal sources, the IPPs and state power generation companies require seamless supply of furnace oil and gas, since they continue to keep oil stocks for the mandatory period according to their respective power purchase agreements.

According to PSO, the state-owned oil marketing company, on an annual average basis, has imported and supplied around 575,000 tons of high sulphur and low sulphur fuel oil per month (9% above last year’s average).

In the current high consumption months, however, the monthly demand has reached 750,000 tons valuing around Rs40 billion from Muzaffargarh power plant (1,050-megawatt capacity), Jamshoro plant (700MW), Hub Power (1,292MW), Kot Addu Power (1,336MW), K-Electric (800MW) and other IPPs (1,076MW).

In addition to this, PSO says it has maintained the liquefied natural gas (LNG) supply chain in the country by bringing six LNG vessels every month, carrying an equivalent of 600 million cubic feet per day (mmcfd), since February 2017.

The volume is almost 15% of the country’s own natural gas supply and is valued around Rs15 billion a month. Last year, LNG imports began with 200 mmcfd and increased to 400 mmcfd by the end of 2016.

Most of the LNG is being consumed for electricity production by Kot Addu Power Company, Rousch Power (370MW), Fauji Kabirwala Power Company (135MW) and the newly commissioned power plants at Bhikki (1,200MW) and Haveli Bahadur Shah (1,200MW).

PSO’s receivables, estimated at Rs296 billion, are to be cleared by the power producers, Sui Northern Gas Pipelines and Pakistan International Airlines for LNG and oil supplies.



“Government must take immediate measures to reduce the financial burden of PSO in order to ensure uninterrupted energy supplies in the country,” an official said.

Published in The Express Tribune, June 10^th, 2017.

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