Pakistan Electric Power Company (Pepco) has paid Rs 24 billion to Pakistan Sate Oil (PSO), Independent Power Producers (IPPs) and Gas companies in the month of July. Talking to Business Recorder, Director General Pepco, Muhammad Khalid said Pepco was making regular payments to all suppliers of fuel on monthly basis.
According to him, this impression was contrary to the factual position that Pepco was making no payment to suppliers, including PSO, out of its collections. It may be noted that the cash-strapped PSO management has accused Pepco for not paying any amount to PSO from its collection.
Press reports have suggested that PSO's banks' overdraft limit is likely to touch final limit of Rs 40 billion, likely to put state-run oil company in a troublesome situation, as it would not be able to borrow more from banks. The release of payments for fuel oil sold by PSO comes after the state-run petroleum company threatened to stop supplies to two of the largest private power producers, including Hub Power Company and Kot Addu Power Company.
Federal Minister for Water and Power had committed to pay Rs 24.7 billion, with Rs 17 billion in current month and remaining payment of Rs 7 billion in next week. But PSO has so far received a meagre amount of Rs 2 billion so far. However, DG Pepco dispelled the impression that Pepco was not paying any amount out of its monthly revenue collection from domestic, commercial and agriculture consumers.
According to him, major chunk of Pepco collections goes to the fuel suppliers immediately and Rs 24 billion was paid only for the month of July. He said monthly collection of Pepco remains Rs 40 - 45 billion in summer, which comes down to Rs 35 - 38 billion in winter. About 70 percent of this collection goes to fuel suppliers and no one can say that Pepco has paid nothing out of its collections to the fuel suppliers, including PSO, he added.
The state-run fuel supplier sent ultimatums to Water and Power Development Authority, Hubco and Kapco a couple of days back, saying clearing outstanding payments had become imperative. PSO sells 3,000 tons of oil daily to these private power companies, which have not paid anything in the month of July.
Pepco, which manages government-owned power plants, still owes close to Rs 28 billion to PSO. The power generation companies delay payments to PSO on the plea that electricity distribution companies are not able to clear their dues. This vicious cycle of inter-corporate circular debt has held the entire energy supply line hostage for over two years.