Debt surge: Government swings into action, to release Rs20b for PSO
Amount will be provided next week, more will be arranged later.
Catering to needs: Rs32b is the worth of oil PSO supplies to power companies every month.
ISLAMABAD:
The government, pushed into action by soaring receivables of Pakistan State Oil (PSO), is expected to release Rs20 billion next week in a bid to bail out the state-run oil marketing giant and make sure that the company continues to bring supplies to meet growing fuel demand.
According to officials, PSO has seen its receivables swell to a high of Rs175.32 billion over a period of less than a year and it has already sent an SOS to the ministries of finance and water and power, asking them to make available Rs150 billion to help the company arrange fuel supplies for power plants in coming months.
Earlier in June last year, the PML-N government soon after coming to power had cleared all the inter-corporate debt in the energy chain amounting to Rs480 billion including PSO’s receivables.
“However, the company’s receivables have again accumulated, raising the spectre of default on international payments,” an official told The Express Tribune.
The Ministry of Water and Power has given assurances that Rs20 billion will be released next week and the remaining will be arranged later.
According to officials, the power producers are the major defaulters of PSO as they owe Rs160.6 billion. In an effort to streamline its operations, PSO has been asking the Ministry of Water and Power to chalk out a mechanism that can ensure regular payments for oil supplies to electricity producers but nothing could be done so far.
Though the government has increased power tariff to stave off debt pile-up and the power sector’s regulator has been allowing tariff revisions to cover fuel price changes, the inefficiency of power distribution companies has led to accumulation of circular debt once again.
On April 30, the outstanding amount power suppliers had to pay PSO stood at Rs161 billion compared to the company’s payables to local and international fuel suppliers at Rs104.59 billion.
The company is struggling to ensure uninterrupted oil supply across the country, especially to power companies. According to PSO officials, it is supplying an average of Rs32 billion worth of oil to power companies every month, but electricity producers regularly delay the payments.
As a consequence, PSO has failed to make payments to domestic refineries, bringing down their production levels.
Meeting international payment obligations had also become difficult and a default could lead to disruption of supplies and their resumption would take months, officials said.
According to breakdown, PSO is to pay Rs12.88 billion to local refineries and Rs91.706 billion to international fuel suppliers including Kuwait Petroleum Corporation.
Besides power producers, PSO is to receive Rs301 million from National Logistics Cell, Rs775 million from Saba Power and Southern Electric, Rs933 million from Pakistan Railways and Rs10 billion on account of price differential claims on high-speed diesel, E-10, light sulphur and high sulphur fuel oil and petrol.
Published in The Express Tribune, May 4th, 2014.
The government, pushed into action by soaring receivables of Pakistan State Oil (PSO), is expected to release Rs20 billion next week in a bid to bail out the state-run oil marketing giant and make sure that the company continues to bring supplies to meet growing fuel demand.
According to officials, PSO has seen its receivables swell to a high of Rs175.32 billion over a period of less than a year and it has already sent an SOS to the ministries of finance and water and power, asking them to make available Rs150 billion to help the company arrange fuel supplies for power plants in coming months.
Earlier in June last year, the PML-N government soon after coming to power had cleared all the inter-corporate debt in the energy chain amounting to Rs480 billion including PSO’s receivables.
“However, the company’s receivables have again accumulated, raising the spectre of default on international payments,” an official told The Express Tribune.
The Ministry of Water and Power has given assurances that Rs20 billion will be released next week and the remaining will be arranged later.
According to officials, the power producers are the major defaulters of PSO as they owe Rs160.6 billion. In an effort to streamline its operations, PSO has been asking the Ministry of Water and Power to chalk out a mechanism that can ensure regular payments for oil supplies to electricity producers but nothing could be done so far.
Though the government has increased power tariff to stave off debt pile-up and the power sector’s regulator has been allowing tariff revisions to cover fuel price changes, the inefficiency of power distribution companies has led to accumulation of circular debt once again.
On April 30, the outstanding amount power suppliers had to pay PSO stood at Rs161 billion compared to the company’s payables to local and international fuel suppliers at Rs104.59 billion.
The company is struggling to ensure uninterrupted oil supply across the country, especially to power companies. According to PSO officials, it is supplying an average of Rs32 billion worth of oil to power companies every month, but electricity producers regularly delay the payments.
As a consequence, PSO has failed to make payments to domestic refineries, bringing down their production levels.
Meeting international payment obligations had also become difficult and a default could lead to disruption of supplies and their resumption would take months, officials said.
According to breakdown, PSO is to pay Rs12.88 billion to local refineries and Rs91.706 billion to international fuel suppliers including Kuwait Petroleum Corporation.
Besides power producers, PSO is to receive Rs301 million from National Logistics Cell, Rs775 million from Saba Power and Southern Electric, Rs933 million from Pakistan Railways and Rs10 billion on account of price differential claims on high-speed diesel, E-10, light sulphur and high sulphur fuel oil and petrol.
Published in The Express Tribune, May 4th, 2014.