PPL being forced to continue supply to Bosicor

The Ministry of Petroleum is reportedly pressurising public sector exploration company Pakistan Petroleum Limited (PPL) to continue crude oil supply to Bosicor after the former served a legal notice to the latter to suspend supply over failure in clearing outstanding dues within the stipulated time, Business Recorder has reliably learnt.
Sources said Bosicor has failed to pay Rs 923 million dues to PPL on account of crude oil supply, which compelled the latter to serve a legal notice to suspend supply till the payment of dues. Bosicor had written a letter to the Ministry of Petroleum for intervention saying that it was not in a position to clear the dues because of circular debt issue. Bosicor maintained that it was operating at 50 percent capacity due to circular debt.
"Now the Director General (DG) Oil has written a letter to PPL directing not to suspend crude oil supply to Bosicor," sources said, adding that the DG Oil has said that it is not an appropriate time to suspend crude oil supply to Bosicor. The DG PC is to deal with exploration companies but the DG Oil wrote a letter to PPL to continue supply to Bosicor.
Sources maintained that the Ministry of Petroleum had adopted dual standards by giving preference to a private sector company instead of PPL, a public sector exploration company which needs the ministry's support. Public sector Oil Marketing Company - Pakistan State Oil (PSO) - is also facing severe financial crisis due to circular debt issue but the Ministry of Petroleum has not taken any concrete steps to resolve it.
"Oil refineries are reluctant to provide fuel supply to PSO on credit and pressurise the latter to lift fuel on cash," sources said, adding that in Bosicor's case the Ministry of Petroleum has intervened and is insisting that PPL continues crude oil supply on credit. "Oil refineries have refused to provide petrol and jet fuel on credit to PSO and are providing less than 25 percent out of their total refined products to PSO," sources added.
Oil and Gas Development Company Limited (OGDCL) was another public sector company which was receiving poor response from oil refineries who owed billions of rupees to OGDCL on account of crude oil supply. "But the Petroleum Ministry has not taken any measure yet to bail OGDCL and the result is that its exploration activities are being disturbed due to non-payment of dues by oil refineries," sources added.
As on January 10, 2011, PSO receivables against different clients stood at: Wapda Rs 43.186 billion, Hubco Rs 56.1 billion, Kapco Rs 19.9 billion, KESC Rs 2.078 billion, financial charges from PIA Rs 960 million, price differential claims (PDC) on HSD Rs 1.382 billion and PDC on imported PMG Rs 4.79 billion. The PSO is to pay Rs 85.3 billion to local refineries and Rs 33.4 billion to international fuel suppliers.