PSO receivables reach all-time high of Rs740bn

ISLAMABAD: The Pakistan State Oil’s (PSO) receivables reached an all-time high of Rs740 billion, with the Sui Northern Gas Pipeline Limited (SNGPL) being the largest defaulter to pay Rs465 billion for receiving imported LNG.

The PSO entered the LNG business in 2015, which led to financial difficulties. The government supplies expensive LNG in domestic sectors during the winter season to overcome gas crises and provide subsidised LNG to five export-oriented sectors.

The SNGPL has been unable to receive bills for LNG supplies to domestic sectors and cannot pay the bills of LNG supplied by PSO. Circular debt has emerged in the supply of imported LNG, contributing Rs465 billion to the debt.

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During the Pakistan Tehreek-e-Insaf (PTI) government’s tenure, a bill was passed to introduce the weighted average cost of gas, which is the average price of imported LNG and locally-produced natural gas, to curtail circular debt but the move was challenged in the Sindh High Court.

Of the total receivables, the PSO has to receive Rs179 billion from the power sector on account of oil supply for electricity generation.

Generation companies are the major defaulters who have to pay Rs147.6 billion, with Hubco owing Rs25.3 billion and Kapco owing Rs5 billion. Due to the lack of a legal framework, domestic consumers have not paid their LNG bills.

Pakistan International Airlines (PIA) is another major defaulter as PSO supplies jet fuel to the airline for running its operations. The PIA has to pay Rs25.7 billion to the PSO.

The state-run oil marketing company is also due to receive Rs8.93 billion from the government on account of price differential claims.

On the other hand, the PSO has to pay Rs88 billion to oil refineries for fuel supply. It owes Rs52.9 billion to the Pak-Arab Refinery Company, Rs12 billion to Pakistan Refinery Limited, Rs3.2 billion to National Refinery Limited, Rs16.3 billion to Attock Refinery Limited, and Rs2.6 million to Enar. Around Rs228billion is required for the retiring of letters of credit, standby letters of credit (SBLC) and Kuwait Petroleum Corporation for LNG payments.

Copyright Business Recorder, 2023