PSO grappling with financial problems, says spokesperson

Circular debt has mounted pressure on oil market giant to make payments.

ISLAMABAD: The state-owned oil marketing company – Pakistan State Oil (PSO) – was grappling with financial problems as receivables touched Rs126 billion from various entities, necessitating solid steps by the government to resolve the issue.

The company spokesperson says PSO that plays a crucial role in maintaining smooth fuel supply across the country was faced with liquidity problems because of the circular debt, however, the official added it was going ahead successfully with its goals.

The official said despite receivables of over Rs 126.803 billion, PSO had ensured uninterrupted fuel supply with adequate fuel stocks. He said that PSO’s receivables as on April 9, among others included Rs46.347 billion from the Water and Power Development Authority (Wapda), Rs53.093 billion from Hub Power Company (Hubco), Rs10.67 billion from Kot Addu Power Company (Kapco), Rs1.552 billion from Pakistan International Airlines (PIA), Rs12.064 billion from Karachi Electric Supply Company (KESC), Rs1.146 billion from independent power producers (IPPs) and Rs1.303 billion from Pakistan Railways.

According to experts, delay or non-payment of these dues might mount the pressure on PSO to pay Rs34.837 billion to the refineries and Rs73.518 billion to its international suppliers.

The company, the spokesperson added, as part of efforts regarding diversification of PSO’s business line, it had signed a memorandum of understanding (MoU) with Engro Powergen (EPL) to review of the technical and economical feasibility of the Thar coal project. The MoU was signed keeping in view the fact that as coal was comparatively cheaper and easily available in comparison to other fuel sources, it had become the fuel of choice for developed nations across the world, the spokesperson said.

The official said the PSO was exploring multiple investment opportunities in the energy sector with special emphasis on Thar coal and intends to acquire 50% of Engro Powergen’s shares in Sindh Engro Coal Mining Company (SECMC) as part of this plan.

Both companies are of the opinion that this MoU will serve as the foundation for a mutually beneficial partnership which will result in extensive benefits for future progress and prosperity of Pakistan.

Published in The Express Tribune, April 10^th, 2013.

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