The Cash-strapped Pakistan State Oil (PSO) with receivables at Rs 178 billion has threatened Kot Adu Power Company Limited (Kapco) to halt fuel supplies if the latter fails to clear dues along with late payment surcharge. Total receivable amount from Kapco is Rs 42.556 billion (including late payment charges of Rs 6.912 billion), reveals a letter written by PSO to Chief Executive Officer (CEO) Kapco.
Pepco/Government of Pakistan (GoP) has been making regular payments on account of late payment charges to Kapco, however the letter states that "the same has not been passed on to PSO. Due to this PSO business with Kapco has become a liability where aging receivables turn profitability into a loss, while PSO is incurring high financial cost in procurement of product."
Late payment charges of Rs 6.9 billion have accumulated from September, 2007 onwards, which have not been cleared by Kapco management. PSO authorities maintain that due to rising dues, refineries have stopped supplying refined oil to PSO on credit. "Similarly, we are facing L/C default for imported products, this has further disrupted PSO supply chain and planning has come to a stall," PSO authorities stated adding that in spite of this PSO has been making all possible efforts to ensure uninterrupted supplies to Kapco in the best national interest. PSO has urged Parco CEO to clear late payment charges immediately failing which supplies to Kapco will be further restrained and PSO will have no other option but to discontinue supplies.
"It is, therefore, expected that Kapco's management will understand the gravity of PSO's adverse financial position and clear PSO's late payment charges (already received from Pepco) alongwith overdue amounts on top priority basis," letter adds.
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