PSO seeks Rs50bn to avert POL crisis

ISLAMABAD: Pakistan State Oil, the state-owned company, is facing an acute financial crunch as its receivables have risen to over Rs460 billion and has sought an amount of Rs50 billion from the government immediately to avert the POL availability crisis in the country.

According to a well-placed official source in the Energy Ministry, the Petroleum Division has prepared a summary for the ECC, asking for approval of immediate release of Rs50 billion to PSO, which is facing a huge increase in its circular debt that has hiked to Rs460.381 billion.

PSO has to import five cargoes of motor gasoline in April, seven cargoes of diesel, three cargoes of furnace oil and seven LNG cargoes.

To a question, the official said that PSO has 55 percent share of the country’s market and right now it has 26 days stock of petrol and 20 days of diesel. “One cargo containing diesel is set to offload after which the diesel stocks will also increase and will be enough for 26 days consumption.”

However, the uphill task for PSO is to cater to the country's requirements in April. The liquidity crisis of the entity has increased manifold owing to which it is unable to cater to the energy needs of the country unless an amount of Rs50 billion is paid to PSO.

“PSO has to ensure the import of 12 cargoes of different products in April worth Rs180 billion but there is a gap of Rs50 billion that the federal government has to bridge with immediate effect.”

The latest data about the receivables and payables position of PSO shows that the receivables of PSO have increased by Rs17 billion in one month to a staggering Rs460.381 billion in March from Rs443.8 billion in February 2022. And the payables of PSO have increased to Rs122.793 billion.

According to the data, the Sui Northern has emerged as the biggest defaulter of PSO in the head of LNG payments followed by the power sector on account of non-payments of fuel. Sui Northern owes PSO Rs246.215 billion and Rs6.754 billion in the head of exchange rate losses while importing LNG for SNGPL.

The power sector is the second biggest defaulter of PSO as it is needs to pay Rs167.731 billion, which includes Rs141.079 billion to be paid by GENCOs or CPPA, Rs21.485 billion by HUBCO and Rs5.167 billion by KAPCO.

Details show that PSO is also required to be paid Rs9.774 billion in the form of price differential claims from the Government of Pakistan. The state-owned oil marketing company, according to the data, is also required to be paid Rs7.450 billion on account of the exchange rate differential on FE 25 loan.

Moreover, the total payables of PSO have increased to Rs122.793 billion out of which the entity needs to pay Rs95.186 billion in the head of the letter of credits of POL imports from Kuwait Petroleum Company and on standby letter of credits for LNG imports. However, the amount of payables by PSO towards five local refineries have also jacked up to Rs27.607 billion.

PSO is required to pay Rs17.168 billion to PARCO (Pak-Arab refinery Company), Rs2.509 billion to PRL (Pakistan Refinery Limited), Rs1.306 billion to NRL (National Refinery Limited), Rs5.590 billion to ARL (Attock Refinery Limited and Rs1.034 million to ENAR.