MoP directs PSO to clear Parco dues

Ministry of Petroleum (MoP) has directed cash-strapped Pakistan State Oil (PSO), with receivables accumulated to Rs 158.49 billion and facing default-like position, to clear the dues of Pak Arab Refinery Limited (Parco) on account of fuel supply, Business Recorder has learnt.
PSO has not been able to clear the dues of refineries as power sector is not willing to make payment from its bills collections. PSO receivables against different clients have swelled to Rs 158.49 billion on Thursday due to failure of power sector to pay on regular basis.
Parco refinery is a joint venture of government of Pakistan and the United Arab Emirates (UAE). "We have received several letters from Parco that is facing circular debt issue," sources said adding that power sector has reportedly been in breach of promises to clear dues of PSO that is facing critical financial situation. Parco has spent Rs 20 to Rs 30 billion from its own resources whereas other refineries have stopped paying petroleum levy (PL) to government and dues to OGDCL on account of crude oil supply.
Finance Ministry had released Rs 28 billion to PSO against commitment of Rs 30 billion in the first week of March keeping in view critical financial situation of PSO which receivables against different clients mainly power sector had piled up to Rs 169.18 billion on March 8.
"After receiving amount of Rs 28 billion, PSO receivables had declined to Rs 144.3 billion that again accumulated to Rs 158.49 billion on Thursday that was still a big challenge for PSO," sources maintained. PSO is to make payment of Rs 52.8 billion to Kuwait Petroleum Corporation (KPC) and other international fuel suppliers for oil import.
On February 17, 2011, PSO had also suspended supply of furnace oil to power-producing entities due to non-payment of dues. During the last meeting, the Finance Ministry had directed Pakistan Electric Power Company (Pepco) to make payment on monthly basis from its own bill collections to PSO in a bid to stop piling up of receivables. Pepco was further directed to pay at least 20 to 30 percent from its bill collections. But PSO is facing problems to receive dues from power sector that is not paying dues from its bill collection. Finance Ministry has been intervening to provide funds to PSO whereas power sector has been reluctant to pay dues.
As on March 24 PSO receivables against different clients stands at; WAPDA Rs 42.29 billion, Hubco Rs 71.6 billion, Kapco Rs 29.38 billion, PIA Rs 1.68 billion, OGDC Rs 321 million, KESC Rs 2.09 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 4.75 billion. PSO's payables stand as: Parco Rs 33.19 billion, PRL Rs 11.9 billion, NRL Rs 9.5 billion, ARL Rs 35.4 billion and Bosicor Rs 4.69 billion.