MoF urged to compel PIA to make payment to PSO

Pakistan State Oil (PSO) has requested the Ministry of Finance to compel Pakistan International Airline (PIA) to clear the outstanding dues of Rs 14.5 billion, saying if payments are not made as per plans, the PSO might not ensure uninterrupted jet fuel supply to PIA.
In a letter written to Secretary Ministry of Finance, a copy of which is available with Business Recorder, the PSO has asked for payment of dues from PIA that have alarmingly swelled to Rs 14.454 billion as Pakistan State Oil is being financially constrained to stop paying to refineries for the jet fuel being supplied to the national flag carrier and in case of any stoppage of jet fuel to PSO by refineries, the PIA will solely be responsible for such breakdown in supply chain.
The letter says, "Outstanding receivables of PIA against jet fuel supplies have accumulated to an alarming level of Rs 14,454 million. Despite our various meetings & letters and assurances by PIA, we have yet to receive any viable payment plan from them to clear the outstanding."
The PIA is repeatedly defaulting on its payment obligations. Though repeated commitments have been made by PIA to reduce the outstanding dues, still they are failing to maintain daily upliftment payments. "As you know, PSO is also confronted with a serious liquidity crunch and non-payment by PIA is aggravating the situation. It is getting difficult for PSO to maintain supply chain throughout the country for uninterrupted PIA operations," says the letter.
"To support the national flag carrier, you will appreciate that PSO is supplying fuel to PIA despite of growing receivables; however, as a national marketing oil company PSO is not getting the reciprocated response from PIA. We acknowledge the government's resolve to restructure PIA to make it a profitable entity. Your good office has always been helpful in resolving PIA's financial issues, therefore the entity request your kind intervention for early inclusion of PSO's receivable amount in PIA's restructuring plan," the letter further says.
According to senior officials of the Ministry of Petroleum and Natural Resources who are familiar with the matters, the state-owned entity is borrowing loans from the commercial banks to cater the jet fuel requirements of national flag carrier and power sector entities and to this effect it has paid the banks a hefty amount of Rs 7.15 billion as financial charges in financial year 2016.
The official said that power sector has once again become a real problem which owes Rs 220 billion of the national oil marketing company. Sources said in this connection two meetings were held on Thursday in the Ministry of Water and Power & Ministry of Petroleum but they didn't find any solution. However, outstanding dues on account of liquefied natural gas (LNG) of PSO against various consumers have reduced to Rs 3 billion from Rs 12 billion two months ago.
When contacted, the PIA spokesman said that PIA is facing a serious liquidity situation and at present it is unable to pay the salaries of the senior staff "as of today January 12, we have not paid the salaries of the senior staff members and hardly managed to pay salaries to group one to five," he added. The spokesman said that PIA is very sensitive towards the clearance of dues and it has paid Rs 47 billion loan with interest, but since it is facing deficit and is in dire straits that is why it is unable to clear the dues of PSO in one go. He, however, said that PSO is a regular supplier of jet fuel to PIA and customer relations are spread over decades. He said due to poor financial health of PIA, timely payments are not always possible. "PIA is paying PSO delayed payment charges. As PIA is a major customer of PSO, there is no move to stop its fuel supply," he insisted.