ISLAMABAD (March 11 2010): Despite the fact that power and oil sectors are in critical situation due to circular debt, the Finance Ministry has no immediate plan for fund releases or commitment to bail them out during the coming month of April, Business Recorder has learnt.

After failure of Finance Ministry to resolve the issue of circular debt on permanent basis, which is being faced by Pakistan State Oil (PSO), the National Assembly standing committee on petroleum and natural resources has resolved to take up the issue before Prime Minister Yousuf Raza Gilani.

Sources told Business Recorder that cash-strapped PSO had requested for immediate arrangement of Rs 60 billion to ease its financial woes in a meeting held on Wednesday. Special Secretary, Finance, Asif Bajwa, chaired the meeting which was attended by all stakeholders.

"But Finance Ministry has agreed to release Rs 5 billion to Pakistan Electric Power Company (Pepco), which will make payment onward to PSO," sources said. "Now the third quarter is going to end, and the Finance Ministry will release money during the next month to bail out oil and power sectors," sources said, and alleged that poor recoveries by Pepco were also the main reason of the circular debt. During the meeting, it was stated that Pepco had sent bills to the consumers and would make payment to PSO during next month.

Meanwhile, briefing the NA body on petroleum and natural resources, PSO Managing Director (MD) Irfan Qureshi said that PSO dues against its clients had exceeded Rs 105 billion. He said that PSO required Rs 57 billion to mature Letters of Credit (L/Cs) for oil import. "PSO may default its L/Cs by April 20 if it is not provided Rs 57 billion," he warned.

The Oil and Gas Development Company Limited (OGDC) authorities informed the NA body on petroleum and natural resources that litigation issues were resulting in loss of oil and gas. "The country is losing 6000 barrels per day crude oil, 300 MMCFD natural gas and 500 tons LPG per day due to litigation," OGDC officials said.

Sui Southern Gas Company Limited (SSGC) representative said that the company was to receive Rs 35 billion from its clients on account of gas supply and refunds from FBR. The outstanding of SSGC against KESC stands at Rs 17 billion and Rs 4 billion from Water and Power Development Authority (Wapda). The gas utility is to receive Rs 10 billion on account of refund from Federal Board of Revenue (FBR).

Copyright Business Recorder, 2010