PSO’s receivables, which have jumped to Rs130 billion, along with OGDCL and refineries will be the biggest beneficiary of this payment while power generation companies, Hubco and Kot Addu Power Company Limited (Kapco), will benefit from the expected tariff hike, said JS Global Capital analyst Atif Zafar.
The prime minister on Tuesday directed to make Rs41.4 billion payment to PSO by the end of this month.
“This should ease off investor concerns over cash flow situation of energy companies as most have been facing difficulties in managing operations and maintaining historic payout levels,” said Zafar in his research report.
However, there is a need for one-time payment of Rs90 to Rs100 billion to completely clear the backlog of the debt, the analyst said.
Power tariff hike impact
Power tariff hike of nine per cent, if materialises, should be another positive for the inter-corporate debt issue, though the increase will not be enough to equate the generation cost with the selling price.
At least an 11 per cent power tariff hike is needed to stem the accumulation entirely based on an oil price assumption of $77 for fiscal year 2011.
PSO expect Rs25b tomorrow
PSO, out of the Rs41.4 billion promised, is expected to receive Rs25 billion tomorrow (Friday) while the remaining amount of Rs16.4 billion is likely to be received by the end of this month.The Ministry of Finance will finance a major chunk of Rs31.4 billion by withholding Rs8 billion of the Sindh government and from recently received funds from the Coalition Support Fund (CSF).
Moreover, the remaining Rs10 billion is expected to be pumped in by Pakistan Electric Power Company (Pepco).
Published in the Express Tribune, June 17th, 2010.
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