Following in the footsteps of Water and Power Ministry, Pakistan State Oil (PSO) has knocked on the doors of Prime Minister's House for immediate allocation of Rs 30 billion to meet its payment obligations and avoid any untoward situation, well-informed sources in Finance Ministry told Business Recorder. PSO's total overdue receivables have risen to Rs 224.4 billion as of December 27, 2016. PSO, the leading public sector company, supplies furnace oil to the power sector despite a continuous default against payment commitments.
In this regard, PSO apprised the status of receivables: power sector's opening overdue receivable balance was Rs 131 billion as on 6 February 2015 and defaulted to the tune of Rs 32.4 billion from 7 February 2015 to date. Total overdue receivables from power sector were Rs 163 billion as on December 27, 2016 of which Rs 56 billion was Late Payment Surcharge (LPS).
According to sources, total receivables from power sector were of Rs 219.4 billion as on December 27, 2016 of which overdue receivables from SNGPL against LNG supplies were of Rs 5 billion. PSO, sources said, has also highlighted that during the next ten days starting from December 27, 2016, the company has to make international L/C payments worth Rs 18 billion while Rs 10 billion will become due towards local refineries. However, due to huge outstanding receivables, PSO is under severe liquidity crunch and has utilized its borrowing lines to the maximum.
The Ministry of Water and Power has reportedly informed PSO that Finance Ministry has been requested to release the amount of subsidy early. "As per our meetings with the Ministry of Water and Power, we have been given to understand that significant payments will be made once Ministry of Finance releases the subsidy to the Water and Power Ministry," the sources quoted PSO high ups as saying in their latest communication sent to Secretary to Prime Minister, Fawad Hasan Fawad, Secretary Water and Power, Younas Dagha, Secretary Petroleum, Arshad Mirza, Secretary Finance, Dr Waqar Masood and Director General (Oil) Ministry of Petroleum.
Keeping in view the gravity of the situation, the sources said, PSO has requested that the matter should be taken up with Ministry of Water and Power and Ministry of Finance for immediate allocation of Rs 30 billion to PSO, allowing PSO to meet its payment obligations and avoid any untoward situation.
Ministry of Water and Power has sought an allocation of Rs 175 billion from the Finance Ministry through a supplementary budget to clear accumulated subsidies. Secretary Water and Power, in its letter to Secretary to the Prime Minister warned that the following events may occur in the coming days, owing to present financial crisis: (i) notices of sovereign default by IPPs and reduced generation due to drying up of their credit lines;(ii) PSO default in furnace oil and LNG payments to their suppliers and reduced supply to the power plants; and (iii) reduced generation leading to non-observance of load shedding plan.
An official told Business Recorder that several IPPs have already served payment default notices to the GoP through the Ministry of Water and Power. Payment position of IPPs is the same as it was one and half years ago with the Ministry of Water and Power invariably seeking a few days reprieve by maintaining that "we are pursuing Finance Ministry," said one IPP representative from Lahore.
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