Govt transfers Rs20b to PSO

Amount received under price differential claims; another Rs11.7b will be released

ISLAMABAD:

The government has transferred Rs20 billion to the account of Pakistan State Oil (PSO) for the clearance of price differential claims (PDC) as it has frozen oil prices till the next budget.

Despite higher crude oil prices in the international market following the Russia-Ukraine conflict, the prime minister announced a freeze on petrol and high-speed diesel (HSD) prices till the upcoming budget.

The global crude oil prices impact the prices of petroleum products in the domestic market.

However, the government did not pass on the impact of rising global crude oil prices and the depreciating rupee against the US dollar to the end-consumers, which led to the accumulation of PDC of the industry.

PDC was supposed to cause more misery to the state-run PSO, which had already been facing a liquidity crunch due to the swelling circular debt.

Its receivables from consumers have surged due to non-payment of dues for the expensive liquefied natural gas (LNG) supply.

At present, PSO’s receivables are at an all-time high at Rs500 billion. Sui Northern Gas Pipelines Limited (SNGPL) is a major defaulter that has to pay Rs278 billion to PSO on account of LNG supply.

On the other hand, SNGPL is also suffering due to the outstanding subsidy claims against export-oriented sectors and non-payment of bills for LNG diversion to the domestic consumers in winter season.

Now, PSO would heave a sigh of relief after the payment of PDC.

The Ministry of Energy (Petroleum Division) informed the Oil Companies Advisory Council (OCAC) that the government would transfer another Rs11.73 billion to PSO in the current week.

In a letter sent to the OCAC chairman, the Petroleum Division clarified that for timely payment of PDC, Rs20 billion had been transferred to the PSO’s assignment account. Moreover, an amount of Rs11.73 billion will also be made available to PSO within this week.

The Petroleum Division emphasised that the amount was sufficient to cover PDC for March 2022.

For the projected PDC of April 2022, “the government will also arrange the required amount that will be made available well ahead of time when claims for the relevant fortnight are submitted to the Oil and Gas Regulatory Authority (Ogra)”, the Petroleum Division said.

Against the available amount of Rs20 billion in PSO’s assignment account, PDC amounting to Rs3.3 billion has been received by Ogra.

PSO has already issued cheques amounting to Rs1.9 billion after the endorsement of Accountant General of Pakistan Revenue (AGPR). The remaining claims will also be paid in the near future.

“Accordingly, there is no pendency on part of Ogra or PSO and in fact oil marketing companies (OMCs) need to expedite submission of claims for timely payments,” the Petroleum Division said.

Regarding the validation/ endorsement of cheques by the AGPR, the Petroleum Division said that the “same is provided in the Asaan Assignment Account Procedures and therefore, it has to be fulfilled to ensure audit requirements”.

The Economic Coordination Committee’s (ECC) decision regarding the benchmarking of premium on HSD imports to the PSO’s latest tender premium has been ratified and issued to Ogra for implementation.

“It is evident that the Petroleum Division, Ogra as well as all other relevant government organisations are well aware of the significance of timely payment of PDC and the claims are being processed on top priority basis,” the Petroleum Division underlined.

The ministry requested the OCAC to advise OMCs/ refineries to expedite the submission of claims along with supporting documents so that timely payments could be ensured.

Published in The Express Tribune, April 7^th, 2022.

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