The state-run company Pakistan State Oil (PSO) is in financial straits these days, reducing its oil stocks to 11 days of the national requirement. "The PSO's is left with only three-day petrol reserves while the diesel stocks can last for 11 days and the situation can further deteriorate if the company's receivables stands at Rs 130 billion are not paid in time," an official of the PSO told APP here on Wednesday.
The official said the PSO had so far received only Rs 34 billion out of the Rs 41 billion approved by the Prime Minister to be released for the PSO. Similarly, the official said that PSO payables had swollen up to Rs 116 billion-Rs 80 billion to refineries while Rs 36 billion to be paid to the international oil suppliers.
The source said the company was nearing to cross the borrowing limits and if the PSO was not bailed out and left defaulting on its payables then implications could affect the entire petroleum sector. On the other hand, the circular debt has also affected oil refineries forcing them to produce at low capacity.
"The circular debt has hit the oil refineries manifold, forcing them to operate at low of their capacities," said an official of an oil refinery. The sluggish repayment process has left the oil refineries in the lurch as marketing companies were importing oil at their own expense, he added.
These companies were not clearing their payables of the local refineries, rather they were spending billions of dollars on oil import, he added. "The huge oil imports are being made at the expense of local refineries which are operating under capacity due to the prevalent circular debt creating serious liquidity crisis for them," the official observed.
He said the refineries are close to crossing the borrowing limit from banks and not in a position to import crude oil for a long period. The oil refineries have also called for working out a fair and consistent pricing mechanism to help the petroleum industry survive.