Debt woes: Ministry demands Rs20b monthly payment to PSO

Marketing company to first purchase oil from domestic refineries.

ISLAMABAD: The Ministry of Petroleum has asked ministries of water and power and finance to make payment of Rs20 billion per month to Pakistan State Oil (PSO) for fuel supply to power companies, a move aimed at easing financial woes of the energy supply chain and preventing a plunge in power production, officials say.

The demand came following concerns aired by oil refineries over inability of PSO to pay their dues for oil purchase.

“It was also decided in a meeting held on Monday that PSO will first purchase oil products from domestic refineries,” Petroleum Secretary Ijaz Chaudhry told The Express Tribune.

He said PSO had paid Rs2 billion to Pak-Arab Refinery Company (Parco) and Rs2 billion to Attock Refinery with the help of money released recently by the government to PSO. In the meeting, demand and supply of petroleum products was also discussed.

Sources said the water and power and finance ministries had not yet responded to the demand of the petroleum ministry to pay Rs20 billon per month to PSO, adding the money would be utilised to make onward payments to oil refineries which were facing difficulty in importing crude oil.

PSO supplies 18,000 to 20,000 tons of furnace oil per day to power companies valuing Rs32 billion. However, the company receives half of the amount. Power companies paid Rs8 billion to PSO in August followed by Rs3.6 billion in mid-September. PSO recently got Rs10 billion from power companies following prime minister’s directive.

Officials said PSO’s payables to local and international fuel suppliers stood at Rs155.06 billion on Monday. On the other hand, its receivables were Rs143.9 billion, which were mainly from power companies.

Published in The Express Tribune, October 11^th, 2011.