Rising receivables: PSO on the verge of default again

Pakistan State Oil (PSO) is reportedly again on the verge of default due to continuous pile-up of receivables against power sector which have reached Rs 220 billion in addition to Rs 7 billion of SNGPL against supply of RLNG as of December 1, 2016, well-informed sources told Business Recorder. The PSO has written a number of letters to the top brass of ministry of petroleum as well as ministry of water and power, besides having meetings for payment of receivables, but the commitments made have not been honoured.
The sources said total receivables against public sector power generation companies (Gencos) stood at Rs 127 billion of which Rs 95.6 billion were overdue, Rs 7 billion were not due and Rs 24.3 billion are late payment surcharge (LPS). The amount of receivables against Wapda Power Privatisation Organisation (WPPO) LSFO/ HSFO PD was Rs 6.8 billion of which Rs 6.6 billion were overdue and Rs 0.2 billion were not due.
Hub Power Company (Hubco), a private power generation company, has to pay Rs 70 billion to PSO of which Rs 43.4 billion were overdue, Rs 2.3 billion were not due and Rs 18.2 billion were LPS. Kot Addu Power Company (Kapco) owes Rs 20.5 billion to PSO, which includes Rs 7.2 billion as overdue and Rs 13.3 billion as LPS. The stock of receivables against Saba Power and Southern Electric is Rs 0.2 billion whereas Karachi Electric has to pay Rs 1 billion.
The sources said the officials of PSO called on the joint secretary ministry of water and power on the issue of receivables, apprising him of increasing receivables with a request for allocation of funds to PSO for reducing the huge receivables balance.
The PSO, sources said, also highlighted that its Over Draft (OD) lines utilisation have increased and further default in payment by power sector could lead to a situation where default in Letter of Credit (LC) may occur. The joint secretary water and power, sources said, acknowledged the default position and said that it was his ministry's utmost priority to clear the default amount under the seven-day credit arrangement. He apprised that a significant amount was expected to be allocated to PSO by December 31, 2016 to bring down the default amount under seven days credit.
The sources said that a settlement on account of AJK was expected from the Finance Ministry of which some significant chunk could be allocated to PSO to reduce the size of receivables. The joint secretary also promised to take up the issue with Secretary Water and Power, Younus Dagha and Minister for Water and Power Khawaja Asif for marking of the expected payment for allocation to PSO. The sources said the amount of receivables from Pakistan International Airlines (PIA) and GoP as Rs 14.2 billion of which Rs 13.5 billion was overdue whereas Rs 0.7 billion was not due. The price differential claims of GoP constituted an amount of Rs 9.6 billion. According to sources, total major receivables are Rs 250.2 billion, of which Rs 183.3 billion are overdue, Rs 11 billion are not due and Rs 56 billion are LPS.