PSO stops fuel supply to Pakistan Railways

Pakistan State Oil (PSO) has stopped fuel supplies to Pakistan Railways for non-payment of outstanding amount. Sources said on Wednesday that PSO's current outstanding status against credit supplies to Pakistan Railways has reached Rs 991 million as on January 8, 2011, of which PSO is facing financial difficulties. In this regard PSO has formally informed Pakistan Railways and clearly refuse. for unlimited supplies.
Delay in payment has aggravated PSO's financial position and consequently disrupted cash flow cycle leaving PSO in volatile liquidity position thereby interrupting smooth distribution of supplies to Pakistan Railways, they added. Sources said that since January 3, 2010 some 4 cheques of Pakistan Railways have been dishonoured by the banks and totalled an amount of Rs 990.798 million is outstanding on the railways.
Cheques worth Rs 469.717 million are waiting for clearance, while unbilled amount is Rs 243.841 million and Rs 277.239 million cheques awaited against bills. "Since Supplies to Pakistan Railways (PR) have exceeds the approved credit limit, PSO is no longer in position to execute further supplies until the outstanding payment have cleared," PSO conveyed to Chief controller of purchase PR through a letter.
The letter has also mentioned the problem of dishonoured cheques due to "unavailability of sufficient funds" in PR account and according to provided details since August 2009 some 43 cheques have bounced. Already the billing/payment process of PR takes considerable time due to delay in receipts of MRNs and release of Payment against or bills and dishonoured of PR cheques on regular basis further increase PSO's financial woes, the letter said.
"With the current outstanding payment status and continues incidence of dishonoured cheques, PSO reserves the right to deny fuel supply to PR and cannot be held responsible for the resultant disruption of Railways operational system," it added. PSO has suggested the PR that they should clear all outstanding payments to PSO and advise the relevant railways authorities to ensure that sufficient funds should be available in the PR account to avoid the dishonoured of cheques. Unless Pakistan Railways fulfils all its financial obligations to PSO in timely manner and ensure proper management of funds, PSO is not in a position to restore regular supplies to PR, the letter concluded.