KARACHI – The Pakistan State Oil (PSO) has warned the government that its Letter of Credit (LC) for oil imports would default if the government does not release Rs 40 billion immediately. The PSO management, through SOS letters, has requested the Ministry of Petroleum to immediately release Rs 40 billion for fresh import of petroleum products, as the oil marketing company has to pay at least Rs 16 billion to international suppliers.
According to sources in PSO, current receivables of the company have crossed Rs 139 billion, causing default of around Rs 86 billion to local oil refineries. In addition, PSO’s dues to international oil suppliers have also swelled to around Rs 35 billion, out of which at least Rs 16 billion is to be paid within the next seven days. The Ministry of Finance and Ministry of Water have been informed regarding the grave economic situation of PSO through various letters.
According to sources, immediate funds are needed to import furnace oil and high speed diesel to meet the country’s requirements. Sources said that PSO has also informed the ministry that default of its LCs would lead to serious problems in future oil imports. Sources maintain that the state-run Pakistan State Oil (PSO) may default on the letters of credit as deep financial crisis and the prevalent circular debt surround the energy sector.
Sources said that some of the refineries, which owe receive Rs 86 billion, have started to show serious concerns, fearing a stands still to the oil supply chain.
