Power sector payables soar by 18.5 billion in four weeks

The power sector”s payables to Pakistan State Oil rose by Rs 18.5 billion during the four weeks ending February 8, according to official documents secured by this correspondent. The documents show a total of Rs 277.8 billion PSO receivables that emanate from non-payment by the government and the private sector. Total overdue receivables from the power sector as of February 8 were Rs 186.5 billion and the late payment surcharge (LPS) amounted to Rs 60.2 billion.

Approximately Rs 142.5 billion is outstanding against generation companies, Rs 24 billion is payable by Kot Addu Power Company, Rs 71 billion by Hub Power Company, Rs 7.2 billion by WPPO, Rs 15 billion by PIA and Rs 9.6 billion by the government as price differential claims.

Overdue receivables from Sui Northern Gas against supply of liquefied natural gas (LNG) totalled Rs 6.6 billion. Both public and private power companies owed this amount to PSO in terms of fuel charges and the late payment surcharge. At a recent meeting of the Cabinet Committee on Energy, the PSO representative stated that in order to ensure uninterrupted power generation and minimise electricity load-shedding in the country, PSO has been supplying fuel to the power sector on the instructions of the government from time to time, without consistent payment.

In addition, Sui Southern Gas Company Limited, Sui Northern Gas, Oil and Gas Development Company and Pakistan Petroleum have been supplying gas to the power sector and their receivables have reached a high level due to delayed payments. The overall receivables of oil and gas supplying companies from the power sector rose to over Rs 338 billion by December 31. The power sector”s outstanding payments to PSO were Rs 228.20 billion.

The PSO”s management has repeatedly written to the Ministries of Water and Power, Petroleum and Finance about its difficult financial position in recent weeks and sought support. According to a PSO official: “We are going through serious liquidity constraints due to massive receivables and need some solid and sustained intervention by the government for resolving this lingering issue.”

The power sector”s payables account for a staggering 91.02 percent of the circular debt involving the fuel supply chain. Unending piling of power sector circular debt weakens the financial health of PSO, an energy giant responsible for buying and distribution of petroleum, oil and lubricants (POL) products in the country, the official said.