PSO’s woes deepen as receivables rise to Rs277b

The financial condition of Pakistan State Oil (PSO) – the market leader in oil sales – is worsening day by day and its receivables from different enterprises, particularly power companies, have swelled to Rs277 billion.

A senior official of the Ministry of Petroleum and Natural Resources said PSO was facing the spectre of default on payments to domestic and international fuel suppliers.

Payables of power producers to state-owned PSO swelled Rs18.5 billion in the past one month that took their total unpaid bills for fuel supply to Rs246.7 billion. “Most of PSO’s outstanding bills were the outcome of delay in payments by the public sector,” the official said.

By February 8, 2017, power companies had to pay Rs186.5 billion as well as a late payment surcharge of Rs60.2 billion. Total payables stood at Rs246.7 billion.

State-owned power generation companies owed PSO Rs142.5 billion, Hubco Rs71 billion, Kot Addu Power Company (Kapco) Rs24 billion, Pakistan International Airlines Rs15 billion and Wapda Power Privatisation Organisation (WPPO) Rs7.2 billion. The government also had to release Rs9.6 billion in price differential claims.

Sui Northern Gas Pipelines Limited (SNGPL) was required to pay Rs6.6 billion for the supply of liquefied natural gas.

The figures showed that both public and private power companies had to settle PSO’s outstanding bills.

In a summary sent to the Cabinet Committee on Energy, the Ministry of Petroleum insisted that in an attempt to ensure uninterrupted power generation and minimise electricity load-shedding, PSO had been supplying fuel to the power sector on instructions of the government, but without consistent payments.

Apart from this, Sui Southern Gas Company (SSGC), SNGPL, Oil and Gas Development Company (OGDC) and Pakistan Petroleum Limited (PPL) have been providing gas for the power producers and their receivables have also reached substantially high levels due to delayed payments.

Overall receivables of the oil and gas supplying companies from the power sector had accumulated to over Rs338 billion on December 31, 2016.

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 their support.

“We are experiencing serious liquidity constraints because of massive receivables and need some solid and sustained intervention by the government for resolving the lingering issue,” an official said.

The growing pile of power sector’s circular debt, which currently stands at one of the highest levels, tends to weaken the financial health of PSO, which is responsible for buying and distributing petroleum, oil and lubricant (POL) products in the country.