The government may issue Terms Finance Certificates (TFCs) worth Rs 90 billion to retire the circular debt of oil, gas and power sectors on August 27. According to sources, Finance Minister Shaukat Tarin had also assured Economic Co-ordination Committee (ECC) of the Cabinet in its special meeting held on Friday last that the Finance Ministry would issue TFCs on August 27 to retire the circular debt of oil, gas and power sectors.
The TFCs will be based on Kibor plus margin of 1.75 percent. The oil, gas and power sectors of Pakistan are still under the pressure of circular debt that stood at Rs 204.174 billion on August 19, resulting in fuel and power shortage problems in the country.
Pakistan State Oil (PSO) is facing the worst situation as its receivables have accumulated to Rs 93 billion. Sources said that some portion of the money raised through TFCs will go to PSO that is to pay Rs 40 billion on August 28 to mature its Letter of Credits (LCs) for oil import. These LCs may default if PSO fails to pay the amount, sources said.
On the other hand, oil refineries have reduced supply of High Speed Diesel (HSD) and petrol due to which some parts of the country are facing fuel shortage, sources said, adding that PSO is losing its market share due to reduced fuel supply by oil refineries.
The government had directed PSO to ensure supply of 35,000 tons furnace oil to the thermal power plants of Wapda and the Independent Power Producers (IPPs), but the supply ran short to around 23,000 tons on Monday and Tuesday due to supply constraints from refineries. In a letter to the government, PSO has said that it has to give around Rs 10 billion to Kuwait Petroleum before September 2.
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