Weather report: Petroleum ministry warns of imminent oil crisis

Requests fellow ministries to arrange Rs60 billion for PSO and avert possible halt to oil refinery operations.

ISLAMABAD:

The petroleum ministry has warned fellow ministries of finance and water and power about the imminent oil crisis that may result in suspension of oil refinery operations if cash-strapped Pakistan State Oil (PSO) is not provided Rs60 billion.

The largest oil marketing company’s receivables from its clients, mainly the power sector, stood at Rs172.4 billion while its payables to local as well as international fuel suppliers at Rs134.2 billion as of November 15.

In a letter sent to the Ministry of Water and Power, a copy of which has also been sent to the presidency, the prime minister’s secretariat and the finance ministry, Petroleum Secretary Ijaz Chaudhry wrote that PSO is supplying oil to the power sector under severe financial pressure. In October alone, PSO supplied petroleum products worth Rs28 billion and received mere Rs17.5 billion, with the balance swelling every day.

Chaudhry confirmed that a letter was written on October 28 to the Ministry of Finance along with the water and power ministry, seeking release of Rs60 billion to ensure smooth operations at PSO. However, he said, the two ministries had not responded to the request so far.

The country is facing a severe energy crisis because of non-payment by the power sector for petroleum products, sources said quoting the contents of the letter.

The petroleum secretary, in the letter, said that PSO was facing serious financial constraints and has reached the point where the company was unable to make payments to oil refineries and clear letters of credit for imports.

Oil refineries are also not in a position to operate at full capacity unless they are paid, Chaudhry said, adding that it may lead to suspension of operations at the refineries.

This will not only impact availability of petroleum products in the country, but will also affect production at oil and gas fields. Such a situation, the petroleum secretary said, will be grave and cause immeasurable hardship to the people, besides halting the wheel of economy.

In view of the above situation, it is reiterated that the ministries sort out the issue on a war footing basis and arrange at least Rs60 billion for payment to PSO to maintain oil flow from suppliers, Chaudhry added.

Published in The Express Tribune, November 16^th,  2011.