Pak Arab Refinery Limited (Parco) and Pakistan Railways (PR) are adding to woes of the cash-strapped Pakistan State Oil (PSO) whose receivables have accumulated to an alarming level of Rs 133.5 billion against the power sector. Parco has reduced fuel supply due to circular debt whereas, rail mode of fuel supply have come to standstill.
In the previous years Parco refinery used to supply 50,000 to 55,000 metric tons through pipeline to PSO depot for onward supplies to IPPs. However, due to circular debt Parco reduced fuel oil quantities to PSO drastically putting further pressure on country's fragile supply chain.
"It must be taken into account that the rail mode of supplies has virtually come to standstill," letter says adding it is worth mentioning that as compared to the same period of previous year delivery of 60774 metric tons, railways has only managed to deliver 8177 metric tons. Hence taking account of the inability of railways, the entire product movement is being made through tank lorries.
The position of PSO receivables still remains critical as it continues to accumulate and has reached an alarming level of Rs 133.5 billion. "It is pertinent to note that the above position is after the adjustment of funds of Rs 43.58 billion (December 10 to date) against the overdue outstanding," letter adds. Therefore the funds could not be treated as advance payment for meeting the daily fuel oil requirement, as incorrectly perceived by Pepco.
Nevertheless, we reiterate that PSO is committed to meet and arrange the daily dispatch at 23,000 metric tons, which is evident from supplies executed during January, 2011. As a result of meeting Pepco's demand the receivables against Hubco and Kapco have further augmented.
Furthermore, the declaration of tank lorries at the destinations and other turnaround have been badly affected due to extremely low temperature and foggy weather in the mid country and inadequate infrastructure at receiving plants have affected our supply chain. However, all out efforts are being made to maximise the direct pipeline supplies to Hubco, to ensure the stock at sustainable level. Likewise for the enhancement of deliveries to Kapco, which is entirely road led decantation at Kapco needs to be enhanced so that the daily requirement can be achieved.