PSO in serious financial crisis

The Pakistan State Oil (PSO), which supplies furnace oil to public power generation companies, is in serious financial crisis due to non-payment of its dues by the Water and Power Development Authority (Wapda), sources in Petroleum Ministry told Business Recorder.
"The huge credit exposure, which PSO is facing, has affected its liquidity position to an alarming level and, with the ongoing supplies worth Rs 2.34 billion, it would not be possible to sustain credit supplies," the company said in a letter to Wapda, a copy of which was also sent to Secretary, Petroleum and Natural Resources.
The company has also expressed annoyance over partly release of dues against the huge outstanding payment, which would lead to non-payment to the refineries, sources said.
"Wapda''s release of a paltry amount for partial payment against the letter of credit is insufficient which, in turn, affects PSO''s remittance to the refineries, besides incurring financial cost," sources added.
Wapda owes Rs 4.676 billion to PSO for oil supplies in September and October 2006, but verified documents are still held by the utility for one reason or the other.
"Therefore, delay in realisation of payments leads to blockage of funds, which leads to heavy financial charge and nullifies our meager earnings."
The company said that it, being a national company, has always made it efforts to support Wapda, but can do so only if it is commercially viable.
"The utility should give due consideration to the issue and release funds to Gencos immediately to avoid any disruption in supplies, particularly in consideration to the approaching winter season and curtailment of gas in the coming months," sources quoted the company as asking the utility.
The company, however, praised Wapda for procuring fuel from it despite deregulation of furnace oil through fortnightly tenders.
It is pertinent to note that, keeping into consideration Wapda''s strategic importance in the national economy, PSO, time and again, has made best endeavours to maintain the supplies overcoming the product availability and logistic constraints.