PSO is on a roll!

The Pakistan State Oil (PSO) has reduced the fuel supply to the power sector after government’s failure to clear the liabilities of the sector that have been surged to Rs 205 billion.
According to officials of PSO the oil giant’s total payables to local refineries and international fuel suppliers have been reached to Rs177.5 billion while receivables from power sector, Pakistan Railways (PR) and Pakistan International Airlines (PIA) stands at Rs 204.781 billion.
Officials told the state oil agency is supplying fuel worth of more than Rs32 billion monthly to the power sector, and the sector is paying back meager amount of about Rs15-16 billion per month which is not enough to run the business of the oil agency. Non availability of payments by power sector is adding to woes of PSO as state agency has to pay to international companies.
Officials said that after several requests ministry of water and power has not paid any major amount during current fiscal year therefore receivables of power sector has touched Rs 205 billion.
The Hub Power Company Limited (HUBCO) is the leading defaulter of PSO with Rs99 billion outstanding dues followed by Water and Power Development Authority (WAPDA) with Rs53.66 billion, Kot Addu Power Company (KAPCO) with Rs22.68 billion.
The company has to receive Rs3.18 billion from Pakistan International Airline (PIA), Rs366 million from Oil and Gas Development Company Limited (OGDCL), over Rs8 billion from Karachi Electric Supply Company (KESC), Rs463 million from National Logistic Cell (NLC) and Rs1.34 billion from Pakistan Railways.
The company is to receive Rs1.4 billion on account of audited price differential claim of High-Speed Diesel (HSD), over Rs3.4 billion on account of price differential on Low-Sulphur Fuel Oil and High-Sulphur Fuel Oil (LSFO/HSFO), Rs1.36 billion on account of price differential on imported PMG, Rs8.612 billion price differential under GLMP and Rs1.419 billion on account of financial charges on PIA.
At present, the PSO owes Rs82.3 billion to local refineries. Of the total, PSO owes Rs26.8 billion to the Pak Arab Refinery Limited (Parco), Rs14.5 billion to Pakistan Refinery Limited (PRL), Rs9.277 billion to National Refinery Limited (NRL), Rs28.91 billion to ARL, Rs3.158 billion to Bosicor and Rs520 million to others.
Official said that the circular debt has crippled the national economy, adding that if the government did not take immediate steps in resolving the circular debt issue, the company will go in default and oil supply chain would be disturbed.
PSO to buy 65pc of Byco’s output, deal signed: Byco Oil Pakistan and Pakistan State Oil have signed a product Sale and Purchase Agreement (SPA) that would ensure guaranteed sale of 65 percent of the former’s production of various petroleum products from its new 120,000 bpd refinery to the latter.
This sale of petroleum products from Byco to PSO would substitute equivalent volume of imports being presently made by PSO particularly of products such as PMG, HSD and HSFO.
The agreement was inked by Naeem Yahya, Managing Director PSO and M. Qaiser Jamal, Country Business Head, Oil Refining, Byco Oil.
A unique feature of this agreement is that Byco will make sales to PSO against a confirmed letter of credit. The agreed payment arrangements will benefit the refinery to ensure timely collection of its dues which will greatly help in reducing the element of circular debt.
Byco’s new oil refinery with a crude oil processing capacity of 120,000 bpd is expected to attain mechanical completion by end June 2012.
This would be followed by pre-commissioning and commissioning activities leading to commercial operations by 4th quarter 2012. Along with the existing 35,000 bpd refinery, the commissioning of the new refinery will make Byco the single largest crude oil refiner in the Country.