Cash strapped: PSO still in the grips of circular debt

Company receivables at Rs90 billion despite government payout.

ISLAMABAD: The spectre of the circular debt still haunts the Pakistan State Oil (PSO) with its receivables from various entities swelling to over Rs90.110 billion despite government pay-outs to settle the circular debt, said a spokesman for the company on Thursday.

However, the company’s spokesperson says, “concrete efforts are under way to settle the circular debt issue and the PSO has received a total of Rs98.9 billion from three entities including Rs55.8 billion from Hub Power Company Limited (Hubco), Rs25.9 billion from Water and Power Development Authority (Wapda) and Rs17.2 billion from Kot Addu Power Company Limited.”

PSO itself paid Rs17.7 billion to Pak Arab Refinery Limited, while subscribing to Rs48.1 billion worth of 5 years government bonds as part of the Mapping Methodology provided by Ministry of Finance.

The remaining amount of Rs33 billion was used to settle outstanding overdraft and borrowing limits with various banks, the official added.

The company’s receivables as on July 25 included Rs49.275 billion from Wapda, Rs14.187 billion from Hubco, Rs1.632 billion from Pakistan International Airlines, Rs12.025 billion from Karachi Electric Supply Company, Rs1.140 billion from Saba Power and Southern Electric and Rs1.212 billion from Pakistan Railways among others, according to the spokesman.

A delay or non-payment of these dues will make it difficult for PSO to pay Rs8.517 billion to local refineries and Rs105.288 billion to the international suppliers.

However the spokesperson said that although PSO was facing liquidity problems because of the circular debt, it was still going ahead successfully with providing fuel supply to power entities, adding that the company had registered high profits in each of the three quarters of the current financial year 2013 and would maintain it to effectively meet the energy needs.

Published in The Express Tribune, July 26^th, 2013.

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