PSO receivables surge past Rs800 billion
PSO FILE PHOTO
Pakistan State Oil (PSO) is facing a never ending circular debt challenge with its receivables crossing the unprecedented Rs800 billion mark as clients have not been able to make payments on time.
The oil marketing company’s debt has started ballooning since entering the liquefied natural gas (LNG) market. A public gas utility to which PSO supplies imported LNG owes Rs519 billion. Last month, the caretaker government made a massive increase of up to 139% in gas prices with claims it had frozen the circular debt. But the debt is still rising because of LNG supplies, the demand for which surges in winter.
For LNG imports, PSO had entered into an agreement with Qatar Petroleum under a government-to-government (G2G) arrangement. But LNG purchases put an extra burden on the company.
At present, PSO has to recover Rs802 billion from its clients compared to receivables of Rs362 billion in August 2021.
It supplies oil to different clients as well as LNG to a gas utility. Power generation companies are among the major defaulters that have to pay Rs150.8 billion. Hubco owes Rs29.5 billion whereas Kapco has liabilities of Rs5 billion.
Pakistan International Airlines (PIA) is another big defaulter. PSO supplies jet fuel to the airline to help continue its operations. The air carrier has not been able to clear its dues, which have accumulated to Rs27.9 billion.
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PSO also has to recover Rs8.9 billion from the government on account of price differential claims.
With the piling up of receivables, the company is now finding it difficult to pay dues of oil refineries with the payables going up to alarming levels.
It has to pay Rs48.8 billion to the refineries. Of the total, the company owes Rs26.6 billion to Pak-Arab Refinery Company (Parco), Rs8.4 billion to Pakistan Refinery Limited, Rs4.1 billion to National Refinery Limited, Rs6.9 billion to Attock Refinery Limited, Rs1.7 million to Byco and Rs1 billion to Enar.
PSO is the country’s largest oil importer. It has an agreement with Kuwait Petroleum to whom the company has to pay Rs104 billion on account of Letters of Credit opened for oil and LNG imports.
However, PSO’s financial results have demonstrated its agility and strength across a diverse portfolio despite the challenging economic scenario and recurrent waves of the pandemic.
Published in The Express Tribune, December 22nd, 2023.
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