Any interruption in the fuel supply chain due to rising circular debt may lead to power breakdown for long durations as oil inventory stock, held by power generation companies, has plummeted, and is enough to meet 1-4 days' requirements, Business Recorder has learnt.
A crucial meeting to be held on Wednesday will take stock of the circular debt issue which has led to lowering of fuel reserves with both thermal power generation units and the oil marketing companies. Sources told Business Recorder that thermal power generation companies are required to build up oil inventory stock to meet requirements of 28-30 days.
"But Hubco and Kapco maintain oil stock for one day, and lift oil from Pakistan State Oil (PSO) on daily basis," sources said, adding that Wapda thermal plant in Muzafarragarh is maintaining the inventory stock to meet requirements for four days. Due to the circular debt problem, the inventory stock of PSO is also sharply declining.
PSO receivables against its clients stand at all time high. "Any interruption in fuel supply by PSO due to circular debt may lead to worst power breakdown as power generation companies were holding the lower inventory oil stock, sources said. They said that power generation companies had to build up the stock this time due to lower demand of furnace oil to store for the coming season.
"During summer, the demand of furnace oil will increase, and power generation companies will be in critical situation if they do not maintain stock," sources added. The competitors of PSO are getting fuel supply from local oil refineries on cash payment, and sources expressed fear that the circular debt problem may further damage PSO market position due to financial crunch. Both power and oil sector companies are currently continuing their operations by getting loans from banks.
As on March 8, PSO dues against its clients had accumulated to Rs 104.1 as follows: against Wapda Rs 39.59 billion; Hubco Rs 36.8 billion; Kapco Rs 15.56 billion; PIA Rs 1.822 billion; OGDC Rs 337 million; Power Holding Co Rs 1.3 billion; financial charges on PIA Rs 884 million; audited price differential claims on HSD Rs 1.382 billion; price differential claims on imported motor gasoline Rs 2.232 billion; and price differential claims under gas load management plan (KESC) Rs 2.278 billion. PSO is to make payment of Rs 13.22 billion to international fuel supplier, Kuwait Petroleum Corporation (KPC), by March 31, and Rs 11.532 billion for letters of credit (L/Cs) payment by March 18, for oil import.
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