Notice to PIA: PSO warns of stopping oil supply as dues pile up
Asks air carrier to pay Rs12.1 billion by Thursday.
ISLAMABAD:
Cash-starved Pakistan State Oil (PSO) has served a final notice on Pakistan International Airlines (PIA), saying it will suspend oil supplies over breach of agreement, a move that may disrupt flight operations.
“PIA is called upon to pay the outstanding amount by Thursday, failing which PSO would be constrained to immediately suspend oil supplies and avail all the remedies available under the law,” PSO said in a letter sent to the air carrier.
“In case cheques are dishonoured, rights and remedies would be pursued before the competent forum.”
Total receivables of PSO have crossed Rs224 billion, of which PIA owes Rs12.1 billion. PSO was planning to stop fuel supply earlier, but could not do so because of intervention by the federal government.
In the letter, the oil marketing giant said in categorical terms that supplies would come to a halt if the national flag carrier failed to clear dues of Rs12.1 billion by Thursday. The amount did not include the mark-up on late payment, penalties and damages.
PSO pointed out that the airline had so far failed to release money despite repeated requests and assurances from them, which was a clear breach of agreement.
PIA is required to make payment within seven days of oil delivery according to the aviation fuel supply agreement signed between the two companies in 2002.
PSO has already asked the federal government to bail it out immediately by paying Rs100 billion to save it from financial collapse.
Of the total receivables of the oil marketing firm, power companies are the major defaulters and have to pay Rs168 billion. PSO, which is seeking to frame a cash payment plan with power companies, has been unable to clear letters of credit and defaulted on payments to local and international banks for oil import.
Published in The Express Tribune, December 10th, 2014.
Cash-starved Pakistan State Oil (PSO) has served a final notice on Pakistan International Airlines (PIA), saying it will suspend oil supplies over breach of agreement, a move that may disrupt flight operations.
“PIA is called upon to pay the outstanding amount by Thursday, failing which PSO would be constrained to immediately suspend oil supplies and avail all the remedies available under the law,” PSO said in a letter sent to the air carrier.
“In case cheques are dishonoured, rights and remedies would be pursued before the competent forum.”
Total receivables of PSO have crossed Rs224 billion, of which PIA owes Rs12.1 billion. PSO was planning to stop fuel supply earlier, but could not do so because of intervention by the federal government.
In the letter, the oil marketing giant said in categorical terms that supplies would come to a halt if the national flag carrier failed to clear dues of Rs12.1 billion by Thursday. The amount did not include the mark-up on late payment, penalties and damages.
PSO pointed out that the airline had so far failed to release money despite repeated requests and assurances from them, which was a clear breach of agreement.
PIA is required to make payment within seven days of oil delivery according to the aviation fuel supply agreement signed between the two companies in 2002.
PSO has already asked the federal government to bail it out immediately by paying Rs100 billion to save it from financial collapse.
Of the total receivables of the oil marketing firm, power companies are the major defaulters and have to pay Rs168 billion. PSO, which is seeking to frame a cash payment plan with power companies, has been unable to clear letters of credit and defaulted on payments to local and international banks for oil import.
Published in The Express Tribune, December 10th, 2014.