The Pakistan State Oil (PSO), with receivables accumulated to over Rs 150 billion, has requested the Finance Ministry to immediately release Rs 40 billion to make payment on account of Letters of Credit (L/Cs) for oil import which are near default in a couple of days, leading to disruption in whole fuel supply chain across the country.
PSO in an SOS call sent to the Ministries of Water, Finance and Petroleum on January 24, 2011 had requested to immediately release Rs 40 billion to save L/Cs that were near to default due to non-payment of dues by power sector.
"But no action has been taken so far and PSO's L/Cs may default in two to three days if funds to PSO are not provided," sources said, adding that the oil mafia wants to make PSO a failed entity so that it could create win-win situation to make direct oil to power producer plants.
In its letter sent to Ministries of Petroleum, Finance and Water and Power on January 24, 2011, PSO Managing Director (MD) Irfan Qureshi requested 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."
The letter adds: "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."
The MD said that PSO's payables to international supplies 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," the letter said.
As on February 7, 2011, PSO receivables against different clients stoood at: Wapda Rs 46.79 billion, Hubco Rs 64.2 billion, Kapco Rs 24.8 billion, PIA Rs 1.14 million, OGDC Rs 337 million, KESC Rs 1.91 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 5.35 billion. PSO is to pay Rs 134.92 billion dues to local as well as international fuel suppliers as follows: Parco Rs 30.9 billion, PRL Rs 10.8 billion, NRL Rs 9.2 billion, ARL Rs 32.06 billion and Bosicor Rs 4.6 billion.
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