Some refineries have refused to resume supplies to Pakistan State Oil (PSO) until the government gives a firm commitment and schedule of payment due to them, Business Recorder has learnt. "We have received letters from Attock Refinery Limited (ARL) and Pak Arab Refinery Limited (Parco) to suspend fuel supply to PSO," sources in Petroleum Ministry said.
When contacted Chief Executive Officer ARL, Adil Khatak confirmed that "we have suspended fuel supply to PSO due to non-payment of dues and will not resume supply unless government gives a firm commitment and schedule of payment due." ARL, National Refinery Limited (NRL) and Bosicor have already suspended fuel supply to PSO. "Parco conveyed to Petroleum Ministry on Thursday that it would suspend fuel supply," sources said. However PSO officials stated that they were yet to receive any formal communication to this effect. "If Parco suspends fuel supply to PSO it will not receive any fuel supply from oil refineries," sources maintained.
"Refineries provided 20 to 25 percent of total demand of petroleum products to PSO on Wednesday and only 10 percent on Thursday," sources said adding that ten percent is defined as 'almost suspension of fuel supply'. Adil Khatak said that ARL had given a notice to PSO and Ministry of Petroleum on Tuesday to clear dues within twenty four hours. "PSO has failed to provide money within the deadline and therefore we have suspended fuel supply on Wednesday," he maintained.
He said that ARL was operating on indigenous crude oil and lifting products from Oil and Gas Development Company Limited (OGDCL) that was the end loser. He maintained that ARL had been operating at full capacity. "We have reduced production by 30 percent after suspension of fuel supply to PSO," he said adding that ARL is now supplying to Shell and APL. "If ARL shuts down, it will create problems for OGDCL wells producing crude oil," he said.
Petroleum Ministry officials said that fuel shortage of all products was on the cards due to suspension of fuel supply to PSO. "PSO as public sector entity has lost 5 to 6 percent value added products market share due to lack of funds," officials said adding that Parco and ARL were providing more fuel to their sister marketing companies as PSO has no funds to pay them on account of fuel supply.
In an SOS to the ministries of Petroleum, Finance and Water and Power on Wednesday, the PSO said that its total receivables against the power sector and Price Differential Claims (PDCs) against government had reached Rs 181 billion. "Moreover, we are getting constant reminders from local refineries to clear their outstanding dues, which as of today stand at Rs 100 billion. ARL, NRL and Byco have already discontinued supplies to PSO, while PARCO and PRL have expressed their inability to continue supplies because of financial constraints. This will ultimately lead to severe shortage of POL products in the country," PSO letter adds.
Since February 1, PSO has supplied fuel oil worth approximately Rs 78 billion to the power sector against receipts of only Rs 45 billion. The deficit in payment of Rs 33 billion along with the opening balance of Rs 148 billion (as of February 1) has left PSO in dire straits, where PSO has already defaulted on its obligations towards tax authorities in respect of duties/taxes and is on the verge of default on its international L/C commitments worth approximately Rs 39 billion due in the next 21 days.
"It is therefore requested that an amount of Rs 60 billion be released to PSO on an immediate basis in order to prevent the company from defaulting on its international commitments and also enabling it to clear its dues towards tax authorities and local refineries," letter adds.