PTI refers funds transfer case to FIA

Amount of Rs80b earmarked for PSO was diverted to Nandipur project

ISLAMABAD:

The Pakistan Tehreek-e-Insaf (PTI) government on Wednesday announced that it had referred a case of diverting funds worth Rs80 billion to the Nandipur power project against the Pakistan Muslim League-Nawaz (PML-N) to the Federal Investigation Agency (FIA).

Minister for Power Omar Ayub tweeted that he had directed the Power Division secretary to refer a case to the FIA against PML-N for diverting Rs80 billion, earmarked for Pakistan State Oil (PSO), to the Nandipur power plant.

PSO had informed the government that Genco-III spent PSO’s funds of Rs80 billion on the Nandipur project. It spent funds to cover other losses related to fuel supply rather than paying PSO. Subsequently, PSO’s receivables increased further.

Nandipur was the most controversial power project. It was launched by the Pakistan Peoples Party (PPP) government, however, work on it was delayed, which led to losses worth billions of rupees to the exchequer. PML-N leader Khawaja Asif had filed a petition against the delay in the Supreme Court in 2011 during the PPP government.

PSO’s total receivables from different sectors have accumulated to Rs323 billion. The power sector is a major defaulter that has aggravated PSO’s position. It has to pay Rs196 billion to PSO on account of fuel supply.

In addition, the company has suffered an inventory loss of Rs27 billion due to a dip in global oil prices. PSO is now seeking a bailout package to clear its mounting circular debt that has pushed it on the verge of financial collapse.

The Petroleum Division has also warned the government that there could be disruption to oil supply in the country if PSO defaults due to non-payment of dues. Officials said PSO was not a defaulter of local refineries as it had made timely payment to them to help run smooth operations.

As a result, PSO had to seek massive bank borrowing to avoid international defaults and consequential disruption in the supply chain of petroleum products.

PSO has also been importing liquefied natural gas (LNG) since 2015. So, the circular debt has emerged in a new form. PSO is to receive Rs86 billion on account of LNG supply.

Pakistan International Airlines (PIA) has to pay Rs21 billion on account of oil supply to continue flights.

Meanwhile, PSO has to pay Rs59 billion to Kuwait Petroleum and Qatar on import of oil and LNG respectively. It has to pay Rs17 billion to local refineries.

Published in The Express Tribune, November 5^th, 2020.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.