PSO’s receivables cross Rs500 billion

The receivables of Pakistan State Oil (PSO) have reached Rs508.3 billion as several clients failed to pay their bills for fuel supplies.

In the first nine months (July-March) of financial year 2021-22, the receivables of PSO increased by Rs151.3 billion, or 42%. They stood at Rs357 billion at the beginning of July 2021.

PSO mainly supplies oil to different clients across the country and also provides liquefied natural gas (LNG) for a public gas utility. Besides oil, circular debt has also emerged in the supply of imported LNG, which has contributed Rs277.8 billion to the debt.

Of the total receivables, PSO has to receive Rs167.1 billion from the power sector on account of oil supply for electricity generation.

Generation companies are the major defaulters that have to pay Rs140 billion. Hubco owes Rs20.9 billion whereas Kapco has to pay Rs5.1 billion.

PSO brings LNG cargoes for onward supply to Sui Northern Gas Pipelines Limited (SNGPL), which then distributes the gas among end-consumers. SNGPL has to pay Rs271 billion to PSO on account of LNG supply.

Parliament has passed a bill for introducing weighted average cost of gas, which is the average price of imported LNG and locally produced natural gas, to curtail circular debt in the gas sector.

For April 2022, the Oil and Gas Regulatory Authority (Ogra) has worked out a price of $15.6 per mmbtu for SNGPL clients and $16.9 for the consumers of Sui Southern Gas Company (SSGC).

Earlier, there was no legal framework for recovering LNG prices from the domestic consumers, leading to the pile-up of receivables.

Pakistan International Airlines (PIA) is another major defaulter. PSO supplies jet fuel to the airline for running its operations. PIA has to pay Rs22.93 billion to PSO.

The state-run oil marketing company is also due to receive Rs8.93 billion from the government on account of price differential claims.

On the other hand, PSO has to pay Rs42.40 billion to oil refineries for fuel supply. It owes Rs23.38 billion to Pak-Arab Refinery Company, Rs8.72 billion to Pakistan Refinery Limited, Rs1.98 billion to National Refinery Limited, Rs6.72 billion to Attock Refinery Limited and Rs1.58 billion to Enar.

Published in The Express Tribune, April 20^th, 2022.

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