PSO’s bank overdraft swells to Rs38b

Cash-strapped PSO's bank overdraft on Friday swelled to Rs38 billion against the limit of Rs40 billion.

Cash-strapped Pakistan State Oil’s (PSO) bank overdraft on Friday swelled to Rs38 billion against the limit of Rs40 billion.

“We have been scrambling for funds with oil stocks dwindling but official quarters are still unmoved to get released the entity’s receivables standing at around Rs131 billion, and we will not be in a position to continue smooth supply in such a bad situation for long,” an official of the PSO told APP here on Friday.

Giving details, the official said that PSO payables had touched Rs115 billion, of which over Rs80 billion has be paid to refineries and Rs34 billion to international oil suppliers.

The source said if the company defaulted on its payables and crossed the borrowing limit, it would not be in a position to manage its affairs properly.

“It is high time the officials concerned take notice of the state of affairs and clear the company’s outstanding funds owed by power companies, including Wapda which has to pay Rs41 billion, Hubco Rs52 billion and Kapco Rs25 billion besides other organisations, as the PSO cannot borrow more if its overdraft touched the set limit,” the official observed.

On the other hand, oil refineries have slammed the PSO for its sluggish response to clearing its payables to them.

The refineries say their liquidity position is eroding owing to the growing circular debt which has badly affected the entire petroleum sector. Moreover, they say as a result of inconsistent pricing solution, they have suffered loss of billions of rupees.

About the PSO’s liabilities, the official said the company owed Rs32 billion to Pak Arab Refinery, Rs12 billion to Pakistan Refinery and Rs9 billion to National Refinery, in addition to other companies.

Replying to a question, the official said if the PSO’s financial health continued weakening, it would also affect its development projects which played a pivotal role in the society’s uplift.

Published in The Express Tribune, July 17^th, 2010.