Pakistan State Oil (PSO) seeks to recover its accumulated outstanding dues, of Rs 51.65 billion, from various power entities including Hubco, Kapco and Wapda as this huge outstanding is adversely affecting its liquidity which may lead to inevitable breakdown in the supply chain, resulting in slowdown of the country's economy.
Sources said that PSO's outstanding amounts against Hubco and Kapco stand at Rs 30.62 billion and Rs 7.03 billion, respectively, as of October 17, 2008. As per clause 8.1 (b) of the Fuel Supply Agreement (FSA), Kapco and Hubco have to comply with their contractual payment obligation, failure of which will render them in default position.
Due to the mounting receivables position from Kapco and Hubco, PSO's capability of timely sourcing various products for its customers, including state power entities, has been severely affected. Moreover, Wapda's outstanding of Rs 14 billion has restrained PSO to maximise its offered quantity against the fortnightly tenders, they added.
In addition to the outstanding amounts from the above stated parties, PSO is to receive Rs 20 billion as price differential claim from the Government of Pakistan. The deteriorating cash flow position due to significant accumulation of receivables has forced PSO to delay payments to local refineries until it received above stated funds.
Moreover, it has led PSO to bear the brunt in terms of heavy financial charges that have been made due to reliance on borrowing from financial institutions to keep the company's operations alive. PSO has sought help from Petroleum Ministry to take action for immediate liquidation of entire receivable amount as the company is in a serious cash crunch and cannot further guarantee meeting the high energy demand of the country.
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