ISLAMABAD: The Finance Ministry has reportedly expressed its inability to releases Rs 57 billion for import of furnace oil after the total subsidy for the power sector exceeded Rs 267 billion during the first nine months of the current fiscal year against a total revised subsidy allocation of Rs 291 total for the current fiscal year.
Sources in the Ministry said that a number of meetings had been held on the issue with senior officials of Water and Power and Petroleum Ministries and fiscal constraints faced by the Ministry of Finance had been communicated to them. A senior official said that the Finance Ministry had not received any directives in this regard.
However, he added that a briefing was given to the caretaker Prime Minister by the Ministry of Water and Power with respect to power situation and financial problems faced by the sector. Sources in the Finance Ministry said that the power sector had been asked to improve recoveries because almost all the amount earmarked in the revised budget for power sector had already been used up and there was no fiscal space other than printing notes which would have serious repercussions on budget deficit.
As much as Rs 185 billion had been earmarked in the budget for the power sector for the current fiscal year which was revised upward to Rs 291 billion. So far, the Finance Ministry has released Rs 267 billion to the power sector and there is still three very critical months to go. Sources in the Ministry of Petroleum and Natural Resources also confirmed that the Finance Ministry had formally expressed its inability to provide additional funds to rescue Pakistan State Oil (PSO) from default. If the PSO failed to pay Rs 11 billion on account of letters of credit (L/Cs) payments to international fuel suppliers, it might be forced to default, they added.
To settle the financial woes of cash strapped PSO, a meeting was held at the Finance Ministry, which was attended by Secretary Finance, Secretary Petroleum, Secretary Water and Power, Managing Director Water and Power Development Authority (Wapda), Managing Director PSO and other relevant officials. "The meeting did not reach a conclusion. If the government does not provide us a letter of comfort, an international default of PSO is sure," sources maintained. "At present, we have only 60,000 tons of furnace oil in stock, sufficient for just five days as PSO is currently supplying 12,000 tons of furnace oil daily to power sector. It is unclear what will happen after five days," an official of PSO said on the condition of anonymity.
The PSO was assured by the Pakistan Electric Power Company Limited (Pepco) that it would be provided Rs 11 billion from collection of electricity bills, but it received only Rs 6.5 billion, the official added. The Ministry of Water and Power wants 16,000 tons of furnace oil supply to power houses on a daily basis to keep the power cuts at the current level, but was unable to arrange the funds for this purpose. "We will witness a serious power crisis in upcoming months of May, June, July and August. PSO is definitely on the verge of international default and if it defaults the country would face serious fuel crisis as well as power crisis," said the official.
The meeting was informed that up to March 31 this year, the Water and Power Development Authority (Wapda) collected only Rs 38 billion on account of electricity bills. The power sector is a leading defaulter of PSO with an estimated amount of Rs 133 billion of which Rs 48.79 billion is owed by Wapda, Rs 56.68 by Hub Power Company (HUBCO), Rs 11.10 billion by Kot Adu Power Company (Kapco), Rs 11.02 billion by Karachi Electricity Supply Corporation (KESC) and Rs 1.15 billion by Independent Power Plants (IPPs) and Rs 4 billion.
Moreover PSO's outstanding dues against National Transmission and Dispatch Company (NTDC) and KESC on account of price differential under GLMP stand at Rs 4 billion. PSO has to pay over Rs 103.48 billion to international fuel suppliers as well as local refineries. On Letters of Credit (L/C) payments, it has to pay Rs 68.3 billion to Kuwait Petroleum Company (KPC) and other international fuel suppliers.
Comments
Comments are closed.