Circular debt haunts PSO

Inter-corporate debt remains a burning concern for Pakistan State Oil (PSO) besides other public sector entities, necessitating solid steps by the government to resolve the issue.
“PSO that plays a crucial role in maintaining smooth fuel supply across the country is faced with liquidity problems because of circular debt but it has not cut fuel supplies to any power sector’s entity over the past few days,” a company spokesperson said on Wednesday.
The official stressed that despite receivables of over Rs133 billion from different entities the PSO had ensured uninterrupted fuel supply with adequate fuel stocks. The spokesperson added that PSO’s receivables swelled to Rs133.541 billion as on June 22, including Rs30.916 billion from WAPDA, Rs51.081 billion from Hubco, Rs27.828 billion from Kapco, Rs2.236 billion from PIA, Rs7.630 billion from KESC and Rs1.053 billion from the Pakistan Railways.
According to experts, a delay or non-payment of these dues can render the PSO unable to pay Rs51.501 billion to the refineries and Rs87.668 billion to the international suppliers.
Replying to a question, the official said the PSO unlike other marketing companies had maintained the requisite storage capacity level according to the terms of its licensee. The petrol crisis that hit mainly the Punjab prompted the Oil and Gas Regulatory Authority (OGRA) to take action against the violators and it issued notices to six oil marketing companies for shortage of required stocks at their oil depots in various parts of the country.
The list did not include PSO as according to sources in OGRA, a number oil marketing companies (OMCs) were discovered defying their licence’s terms. These companies included Attock Petroleum Limited, Byco, Hascol Petroleum Limited and Overseas Oil Trading Company Limited (OOTCL). The oil marketing companies are bound to ensure 20 days stocks in their depots to avoid further shortage.
Regarding the company’s performance, the spokesperson said despite the constraints imposed on PSO, it posted improved after tax earnings of Rs9.25 billion during the third quarter of financial year 2011 as compared to Rs7.53 billion during the same period last year. The country’s overall fuel consumption during the period under review declined by 1.7 per cent as compared to the corresponding period last year.