The worst ever oil and power crisis is looming on the horizon as cash-strapped Pakistan State Oil (PSO) with Rs 156 billion receivables is struggling to arrange financing for import of petroleum products and may be compelled to default of Letters of Credit (L/Cs).
In spite of repeated requests to clear dues, PSO has received only an amount of Rs 2.8 billion from Wapda. PSO is providing furnace oil to power sector worth Rs 1.5 billion per day. "PSO has deferred tenders for import of oil products many times in the past due to non-payment of dues by power sector," sources said.
"After government decision to dissolve Pakistan Electric Power Company (Pepco), the entire mechanism of payment has been disturbed and no one is responding to PSO's pleas for payments due," sources said adding that demand of furnace oil had gone up due to gas load shedding and power plants would shut down if PSO failed to import furnace oil.
"Power sector requires fuel adequate to meet five days demand but it is currently managing on two days stocks," sources said. Oil refineries are operating at 60 percent production capacity due to circular debt issue. "Oil refineries are providing 20-30 percent fuel out of total production to PSO which is not enough to meet the country requirements and, therefore, oil imports are essential to meet domestic needs," sources added.
As on December 22, 2010, PSO receivables against different clients were: Wapda Rs 52.24 billion, Hubco Rs 62.3 billion, Kapco Rs 27.2 billion, PIA Rs 506 million, OGDC Rs 475 million, KESC Rs 1.99 billion, financial charges from PIA Rs 960 million, price differential claims (PDC) on High Speed Diesel (HSD) Rs 1.38 billion and PDC on imported PMG Rs 4.8 billion.
PSO is to pay Rs 124.25 billion dues to local as well as international fuel suppliers, ie Rs 37.12 billion to Parco, Rs 11.5 billion to PRL, Rs 9.3 billion to NRL, Rs 29.23 billion to ARL, Rs 4.69 billion to Bosicor and Rs 31.6 billion on L/Cs payments to international fuel suppliers.
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