PSO facing major financial crunch

The cash-strapped Pakistan State Oil (PSO) with receivables accumulated to over Rs 140 billion, fears default of its Letter of Credits (LoCs) that would lead to disruption in fuel supply chain across the country.
In its letter sent to Ministry of Petroleum, Finance and Water and Power on January 24, 2011, Managing Director (MD) PSO Irfan K Qureshi stated that "in order to avoid an imminent LC default and to make payment to local refineries, we request your help for an immediate release of Rs 40 billion to PSO. Your timely and kind intervention will help avert major crisis in the oil and power sector of the country."
"We wish to draw your urgent attention to the liquidity crisis of PSO which is badly hampering our ability to ensure uninterrupted supply of oil to power sector," letter adds. Qureshi stated that PSO's receivables had crossed Rs 139 billion due to which it was unable to pay dues to local refineries amounting to Rs 86 billion. "Such consistent default on payment has forced these refineries to reduce their throughput and curtail supplies to PSO. Consequently we have to rely heavily on imported product resulting in drain of country's foreign exchange," letter says.
Qureshi said that PSO payables to international suppliers had accumulated to Rs 35 billion out of which more than Rs 16 billion was payable within the next seven days. "We need immediate help to meet our LC commitments for imports which if not cleared on time, will result in disruption of entire supply chain," letter adds. As on January 26, 2011, PSO receivables against different clients stood as follows:
Wapda Rs 43.8 billion, Hubco Rs 60.15 billion, Kapco Rs 22.9 billion, PIA Rs 526 million, OGDC Rs 337 million, KESC Rs 1.78 billion, financial charges from PIA Rs 960 million, price differential claims (PDC) on High Speed Diesel (HSD) Rs 1.38 billion and PDC on imported PMG Rs 4.79 billion. PSO is to pay Rs 118 billion dues to local as well as international fuel suppliers. The break-up is as follows: Parco Rs 29.9 billion, PRL Rs 10.5 billion, NRL Rs 9.2 billion, ARL Rs 31.3 billion and Bosicor Rs 4.6 billion.