PSO may cancel imports of petroleum products from June 21

[Lahore_Real_Estate]

ZAFAR BHUTTA
ISLAMABAD (June 15 2010): The cash strapped state run Pakistan State Oil (PSO) may be forced to cancel imports of various petroleum products from June 21 onwards which may lead to fuel suspension across the country if Water and Power and Finance Ministries do not give a definite plan of payments due," Business Recorder has learnt reliably.

"If POL imports are cancelled, uninterrupted fuel supplies would be discontinued to the power sector and the nation may face major power outages," sources said adding that the country's retail outlets may face a dry-out situation and the commuters would be adversely affected. Refineries are already operating on low production and PSO is currently being given less petroleum products due to non payment of dues.

The state run oil marketing company, which is on the verge of default, has requested Finance and Petroleum Ministries to intervene as its dues have swelled to Rs 138 billion from clients on different accounts and it is running from pillar to post to arrange finances to avoid default. "After repeated requests made to all concerned Ministries, no remedial measures have been taken," sources said.

Ministries of Water and Power and Finance had committed to give cash payment plan to PSO on account of fuel supply to power sector, which is a big defaulter of PSO. "But Water and Power and Finance Ministries have not honoured their commitments," sources maintained.

PSO in its SOS letter sent to Finance, Petroleum and Water and Power Ministries on June 8 warned about the possible closure of power generation companies which are running at minimum stocks, due to reduced supplies of furnace oil. PSO is under a severe financial crunch due to the continuing circular debt issue.

"In the current scenario of cash flow position of the company, we are not able to place import orders to meet the demand of power generation companies," PSO warned concerned Ministries adding that once its fuel supply chain is disturbed it will take four months to restore the supply.

As on June 14 morning, PSO receivables against Wapda stand at Rs 45.6 billion, Hubco at Rs 51.17 billion, Kapco at Rs 27.14 billion, PIA at Rs 1.24 billion, OGDC at Rs 399 million, KESC at Rs 1.7 billion, Power Holding Company at Rs 1.3 billion, financial charges on PIA at Rs 935 million, audited price differential claims on HSD at Rs 1.3 billion, price differential on imported PMG at Rs 2.93 billion, price differential under gas load management plant (KESC winter season) at Rs 2.4 billion and price differential under gas load management (KESC summer season) at Rs 1.7 billion.

PSO payables to local oil refineries and international fuel suppliers stand at Rs 117.9 billion which include Rs 33.904 billion to Parco, Rs 13.6 billion to PRL, Rs 9.43 billion to NRL, Rs 19.53 billion to ARL and Rs 4.84 billion to Bosicor. PSO is also to make payment of Rs 36.2 billion to Kuwait Petroleum Corporation (KPC) and other international fuel suppliers.