Genco, Hubco, KESC and Kapco: PSO threatens to cut fuel supplies

Pakistan State Oil (PSO) with accumulated receivables as high as Rs 140 billion, has warned Genco, Hubco, KESC and Kapco that it would discontinue supply of fuel on credit basis from August 1, 2010 if they fail to clear dues amounting to over Rs 126 billion by July 31, Business Recorder has learnt. In case of discontinuity of supplies to defaulting customers PSO also plans to revise its future import plans for furnace oil accordingly.
"Keeping in view the company's severe financial constraints and in line with your instructions during this meeting to take steps in order to mitigate the harmful effects of these huge receivables, it has been decided that PSO will be intimating GENCOs, Hubco and Kapco to ensure payments of these receivables by July 31st 2010," PSO management said in a letter sent to Petroleum Minister Syed Naveed Qamar adding that incase of non-payment, PSO will be discontinuing the supply of fuel on credit basis to Hubco & Kapco from August 1st 2010.
As discussed during the Energy meeting, PSO is currently facing serious liquidity issues due to non-receipt of payment from Gencos, Hubco and Kapco, against uninterrupted and continuous fuel supplies made to these entities. PSO is to receive Rs 52.042 billion from Hubco, Rs 28.902 billion from Kacpo and Rs 43.292 billion from Genco.PSO is also to receive Rs 7.1 billion financial charges from these power generation companies.
"If financial arrangements for liquidating PSO's outstanding dues are not firmed up and provided to us, then the mounting receivable amount which has already reached Rs 140 billion (inclusive of Rs 1.3 billion PDC, Rs 3.1 billion on KESC NTDC account and Rs 1.52 billion from various entities) will make it impossible for PSO to maintain further credit supplies," PSO letter adds.
Furthermore PSO will be making supplies to KESC under NTDC arrangement up to July 31st 2010 and these supplies will also be discontinued w.e.f August 1st 2010. "Currently the receivables on account of supplies to KESC under the GLMP/NTDC account stand at Rs 609 million and 3128 million respectively," PSO management said adding "We would also request your kind intervention for advising the Ministry of Water and Power to provide the schedule of payment plan of receivables so that PSO is able to plan and make financial arrangements for procurement of product and maintain the supply chain," letter concludes.