Rs 20 billion payment to PSO and Shell: MoF arrangement with banks consortium vetted

The Law Division has vetted the Ministry of Finance''s (MoF) arrangement with the banks'' consortium for Rs 20 billion payment to Pakistan State Oil (PSO) and Shell for outstanding price differential claims (PDCs). In its opinion, the Law Division said that the government can make an arrangement with the banks for facilitating PDCs payment to PSO and Shell.
The government is negotiating with the banks'' consortium comprising National Bank of Pakistan (NBP), Standard Chartered Bank, Askari Bank, United Bank Limited (UBL), Muslim Commercial Bank (MCB) Bank Al-Falah and Allied Bank Limited (ABL).The officials of the Finance Ministry claim that the negotiations for the arrangement with the banks are at the final stage and PSO and Shell are going to get the money some time in the current week. The MoF had referred the case to the Law Division for legal opinion for the payments to PSO and Shell from the banks'' consortium.
PSO and Shell contribute over 75 percent in oil supply market and their Rs 50 billion are payable as PDCs. These both major upstream industry players are approaching the government for early payment of PDCs to keep intact their supply chain. The government is not financially sound enough to pay OMCs outstanding bills for PDCs and marking alternative arrangements through the banks to clear their dues.
PSO, being a public sector oil marketing, is under huge financial pressure. Its management is running from post to pillar to get whatever payments are possible. It has been informing the government on its cash flow situation on day-to-day basis. The management has repeatedly informed the Ministry of Petroleum that delay in payments could add to its woes and subsequently force it to suspend supply to some of its bulk buyers. It, particularly, mentioned the case of Independent Power Producers (IPPs) in a recently written letter to the Ministry of Petroleum.