Default looming: PSO to pay Rs15b to oil suppliers by Sept 23

PEPCO says it makes payments from what it receives from consumers.

ISLAMABAD:

Cash-strapped Pakistan State Oil (PSO) is again close to defaulting on payments to international fuel suppliers as it has not been able to arrange Rs15.6 billion to retire letters of credit due on September 23.

PSO requires Rs53 billion to make payments to fuel suppliers this month. It has already converted some of its letters of credit into bank loans amounting to Rs26 billion to avoid default on September 16.

“Now PSO has to pay Rs15.6 billion for retiring letters of credit coming due between September 17 and 23, but it has yet to arrange funds as power companies could not clear dues for fuel purchase,” a source said, adding PSO would require an additional Rs11.4 billion to pay for oil imports from September 24 to 30.

In a letter sent on September 9 to the ministries of water, finance and petroleum, PSO requested them to immediately arrange Rs50 billion to prevent the company from default. Though PSO has converted some of the letters of credit into bank loans, the situation has become critical as more payments have become due this week.

PSO was supplying fuel worth billions of rupees to the power sector every day and had been requesting Hub Power Company (Hubco), Kot Addu Power Company (Kapco) and Water and Power Development Authority (Wapda) to clear their dues which will ensure uninterrupted supplies, sources said.

Pakistan Electric Power Company (Pepco) spokesman Ijaz Rafique said “we make payments to the independent power producers (IPPs) and PSO from what the company receives from its consumers.”

Rafique said Pepco was to receive Rs300 billion from private and public sector consumers which was creating problems in payment of dues to fuel suppliers. “The subsidy in the power sector is another element that has disturbed the system,” he added.

Sources said PSO had total receivables of Rs155.4 billion and payables of Rs155.72 billion to local and international fuel suppliers due to non-payment of dues by power companies.

On September 21, PSO was to pay Rs31.38 billion to Pak-Arab Refinery Company, Rs8.63 billion to Pakistan Refinery, Rs9.31 billion to National Refinery, Rs17.2 billion to Attock Refinery and Rs4.28 billion to Bosicor.

PSO was to receive Rs31.4 billion from Wapda, Rs65.8 billion from Hubco, Rs34.2 billion from Kapco, Rs364 million from OGDC, Rs7.03 billion from KESC, Rs1.2 billion from Pakistan Railways, Rs1.38 billion in price differential claims on high-speed diesel, Rs3.4 billion on furnace oil and Rs1.35 billion on imported petrol.

Published in The Express Tribune, September 22^nd,  2011.