The cash strapped public sector entity Pakistan State Oil (PSO) has sent a SOS to the government seeking immediate release of Rs 17 billion to clear its overdue letters of credit (LC) in next 24 hours otherwise it could default.
An official source said the Secretary Ministry of Petroleum has written a letter to the Ministry of Finance and Ministry of Water and Power on August 27 seeking immediate release of the amount to avoid PSO default. However, the ministries gave no response and were again asked to release money on Monday. The company had sought Rs 23 billion last month to clear its outstanding dues to the Kuwait Petroleum Company (KPC) and other fuel oil suppliers out of which the government only provided Rs 19 billion. For payments during the first week of September it sought Rs 13 billion and Rs 4 billion of the last month to clear its outstanding dues, he added. PSO, he said was also negotiating with the banks for a loan in case the government failed to timely release the amount. The company had to make the payment within next 24 hours and if the money was not arranged it could default which meant that no fuel oil suppler would be interested to deal with the entity. The blue chip company PSO, supplies fuel oil worth Rs 35 billion every month to the power sector out of which it receives only Rs 15 billion while the rest of Rs 20 billion is included in its liabilities. It has total receivables of Rs 151.8 billion and has an overdue amount of Rs 58.5 billion to the fuel oil suppliers.
The company has taken huge loans from banks to timely clear its liabilities. However, the situation has taken a turn for the worst as the company was paying close to Rs1 billion per month interest to banks. The company made an interest of Rs 9 billion last fiscal. The company earns Rs 12 to 14 billion profit per annum. Under the prevailing circumstances the company was not in a position to pay dividend to its share holders and it could not continue running its operations profitably. The Petroleum Ministry has proposed to the Ministry of Finance and Ministry of Water and Power that financing should be arranged on the pattern of local LC from local banks for the purchase of fuel by power sector entities. The proposal if implemented would end the woes of PSO, the source said. According to receivables and payables position of PSO on September 05, its receivables from WAPDA were Rs 18.8 billion, HUBCO Rs 58.0 billion, KAPCO Rs 32.1 billion, PIA Rs 1.8 billion, OGDCL Rs 50 million, KESC Rs 5.4 billion, and Pakistan Railways Rs 818 million. It also claims audited price differential claim on high speed diesel of Rs 1.3 billion, price differential on LSFO and HSFO Rs 3.4 billion, price differential on imported PMG Rs 1.3 billion and price differential under GLMP and NTDC-KESC Rs 6.2 billion. PSO overdue amount to refineries is Rs 58.8 billion including PARCO Rs 24.8 billion, PRL Rs 7.3 billion, NRL Rs 9.4 billion, ARL Rs 12.9 billion, Bosicor Rs 3.7 billion and others Rs 272 million.
PSO seeks Rs17 billion immediately to avoid default
