Cash-strapped Pakistan State Oil (PSO), after curtailing diesel sales, resumed partial supply to Pakistan Railways on Saturday and gave a deadline of Monday for clearing the outstanding amount.
PSO is scrambling to arrange funds due to substantial delay in payments by power companies and railways for fuel purchase. Its receivables have crossed Rs152 billion as the government failed to release promised Rs25 billion by September 15. Sources told The Express Tribune that PSO curtailed fuel supply to the railways after its tender expired on August 14 and gave a one-month grace period to renew the tender but the railways could not meet the deadline.
They said the railways was reluctant to ink a fuel supply agreement which would set a credit limit for fuel supply and bind it to make timely payments.
The railways’ cheques worth Rs300 million bounced on Friday, forcing PSO to curtail fuel supply, sources said, adding the railways then sent a revised oil purchase order, which resulted in resumption of partial supply.
PSO supplied one million litres of high speed diesel to the railways despite remaining dues of Rs1.1 billion.
Bank loans taken to retire LCs
Sources said PSO had taken bank loans to retire letters of credit (LCs) worth Rs25 billion which became due on September 15 and 16. Prime Minister Yousaf Raza Gilani, in a meeting held last month, had announced that the government would provide Rs25 billion to address financial woes of PSO, but no money was released.
PSO has receivables of Rs152.9 billion and payables of Rs157.09 billion to local and international fuel suppliers. On September 16, PSO had to pay Rs28.6 billion to Pak-Arab Refinery Company, Rs8.7 billion to Pakistan Refinery, Rs9.6 billion to National Refinery, Rs15.07 billion to Attock Refinery and Rs4.2 billion to Bosicor.
On the other hand, Wapda owes PSO Rs30.9 billion, Hubco Rs64.3 billion, Kapco Rs33.5 billion, OGDC Rs396 million, KESC Rs7.4 billion, Pakistan Railways Rs1.12 billion, price differential claims of Rs1.38 billion on diesel, Rs3.4 billion on furnace oil and Rs1.3 billion on imported petrol.
Published in The Express Tribune, September 18th, 2011.
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