Following the direction from Prime Minister Yousuf Raza Gilani, the Ministry of Finance has called a meeting on Monday to resolve the issue of circular debt, which forced the Pakistan State Oil (PSO) to suspend fuel supply to the power sector, on credit, on Thursday last due to non-payment of dues, Business Recorder has learnt.
Finance Minister Dr Abdul Hafeez Sheikh will chair the meeting which will be attended by officials of Petroleum Ministry, Water and Power ministry and Managing Director (MD) of PSO. After intervention of Prime Minister, fuel supply was restored to Pakistan Electric Power Company (Pepco). However, supply to Hubco and Kapco remained suspended. According to letters written by PSO, Hubco, Kapco and Pepco were warned to suspend fuel supplies on credit if dues were not cleared.
The Pakistan State Oil decided to discontinue credit supplies of furnace oil to Wapda, Hubco and Kapco from 13:00 hours on February 17, 2011 on account of non-payment of dues by these entities. According to PSO authorities, "the decision to cut off supplies, which amount to approximately 23,000 tons on daily basis, had come after a series of deliberations by the top management". PSO is on the verge of impending default and had been supplying uninterrupted fuel to the power sector to responsibly meet the energy requirements of the nation. However, given that the total receivables of the company had increased to an astounding Rs 158.65 billion, the management was left with no choice but to stop supplies to the power sector.
PSO has not been able to make timely payments to its suppliers due to non-payment from the power sector. The company had sent SOS messages and reminders to all power entities for payments since the onset of February yet had not received any response. PSO received last payment from the power sector was on 7thJanuary 2011.
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