International suppliers have walked out of bidding to provide Liquefied Natural Gas (LNG) to Pakistan State Oil (PSO) because of its overexposure to the new business, a report in the local media said on Wednesday.
According to a Dawn report, a senior PSO officials said that the company’s major ‘authenticated’ receivables have gone beyond Rs 253 billion as of July 30, 2015 including around Rs 30 billion of stuck up funds in the LNG business alone. He said the PSO’s previous record was of Rs 238 billion receivables in November that led to a country-wide petrol crisis in January. The receivable from the public sector companies of the Water and Power Ministry at the time stood at Rs 113 billion which have now reached Rs 124.3 billion as of July 30. Total power sector receivables are now at Rs 200 billion.
“Around Rs 29 billion was long overdue against Sui Southern Gas Company Ltd on account of LNG supplies by the PSO,” said the official. He said PSO had already committed a number of defaults on its payments to its suppliers, adding that the supply chain situation was not stable.
“Like always, power sector mostly in the public sector is the major culprit behind liquidity crisis of the country’s largest fuel supplier, but LNG has effectively broken our back”, he said and lamented the leadership gap to take up crisis situation with the prime minister.
The PSO executive said two international firms — Gunvor of UK and Dutch Trafigura — had purchased bid documents for supply of four LNG ships in September but withdrew their bids on the bid opening date i.e. July 27 in Karachi.
The official said the PSO had so far imported a total of eight LNG ships after the completion of Engro’s terminal in April this year on temporary basis on-spot purchase basis and six of them were arranged from Qatar on goodwill basis and two others were supplied by private parties.
Qatar has since declined to continue ‘temporary business’ without prior standby letter of credit (SBLC) which the ministries of petroleum, power and finance failed to arrange due to internal rifts.
The last ship carrying LNG was delayed for two weeks following refusal by the shipping authorities to allow its berthing because the prime minister had given permission for import of only four shipments. Another special permission was secured from the prime minister for another four ships.
