Govt allocates Rs30b to ease PSO debt crisis

Sources say Rs5b released, Rs25b more to be released this week

ISLAMABAD:

In a significant move, the federal government is set to disburse Rs30 billion to Pakistan State Oil (PSO) this week, aiming to alleviate the burden of revolving debt and address the longstanding issue of PSO arrears. Ministry of Finance sources revealed that an initial Rs5 billion has already been released to Sui Northern Gas Pipelines Limited (SNGPL) for payments to PSO. The remaining Rs25 billion, earmarked for subsidy disbursement to domestic consumers and fertiliser plants, is scheduled for release this week.

As soon as SNGPL receives the full amount of Rs30 billion, immediate payments to PSO are anticipated. The allocated subsidy for domestic consumers and fertiliser plants is part of the budgetary provisions. Government sources hinted that the federal cabinet is poised to make a decision next week, considering the transfer of two power plants to PSO as a strategic move to curtail the revolving debt.

Read PSO receivables surge past Rs800 billion

Pending approval from the federal cabinet, PSO will be granted a controlling stake in both power plants. This action is expected to slash the gas sector’s revolving debt by an estimated Rs100 billion, leading to a substantial reduction of Rs130 billion in PSO's overall revolving debt.

The oil marketing company’s debt has started ballooning since entering the liquefied natural gas (LNG) market. For LNG imports, PSO had entered into an agreement with Qatar Petroleum under a G2G arrangement. But LNG purchases put an extra burden on the company.

Published in The Express Tribune, January 18^th, 2024.

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