PSO may default on fuel supplies as crisis deepens: receivables swell to Rs 164.65 billion

The financial crisis of the cash strapped Pakistan State Oil (PSO) deepened further on Monday, as its receivables swelled to Rs 164.65 billion, leading the entity to possible default on fuel supplies mainly due to non-payment of dues by power sector.
PSO was expecting to receive at least committed amount of Rs 30 billion on Monday but no money was disbursed to PSO till the filing of this report. PSO had awarded a tender of one million tons oil supply for March and April after Finance Ministry committed to release Rs 30 billion.
The tender was awarded for 14 cargoes of 65,000 tons of high-sulphur fuel oil and another six parcels of 60,000 tons of low-sulphur fuel oil (LSFO). PSO had also awarded a tender for three jet fuel cargoes of 16,500 tons, for March-April delivery Despite commitments, the government had not released funds to PSO on account of supply of fuel to Independent Power Plants (IPPs), leaving the state run oil giant in deep financial crisis. The outstanding balance was Rs 150 billion during the first week of February which increased sharply as none of PSO's major clients paid money. "If PSO defaults, the entire supply chain will be disrupted," official said, adding that tranche of Rs 30 billion was the peanut to save PSO from default from the time being but uninterrupted credit sales will keep on swelling.
On February 17, PSO had suspended supply of furnace oil to power-producing entities. Oil refineries have also reduced the credit supply to PSO by 58 percent due to non payment. In December 2009, PSO's refinery receipts were 173,000 metric tons that dropped to only 73,100 tons at present.
As on March 1, 2011, PSO receivables against different clients stand at; WAPDA Rs 50.6 billion, Hubco Rs 70.5 billion, Kapco Rs 28.8 billion, PIA Rs 1.37 billion, OGDC Rs 232 million, KESC Rs 1.95 billion, financial charges from PIA Rs 1.017 billion, price differential claims (PDC) on High Speed Diesel (HSD) Rs 1.382 billion and PDC on imported PMG Rs 4.68 billion.
PSO's payables stand at Rs 132.49 billion to local as well as international fuel suppliers as: Parco Rs 31.51 billion, PRL Rs 11.54 billion, NRL Rs 33.6 billion, ARL Rs 33.6 billion and Bosicor Rs 4.6 billion. PSO is to pay Rs 41.31 billion to KPC and fuel oil suppliers for upcoming imports.