The News reported that Pakistan State Oil’s financial situation has become untenable with total receivables at PKR 180.145 billion.

The huge outstanding caused by non payments from the power sector and the national airline has crippled PSO’s liquidity position and may lead to a breakdown in the supply chain resulting in fuel shortages in the country.

PSO’s current payables stand at PKR 161.941 billion including PKR 83.956 billion LC payments to Kuwait Petroleum Company and other fuel oil suppliers.

Despite repeated non payments from power sector, PSO has tried to supply fuel worth an average of PKR 32 billion to the power entities on a monthly basis. Despite this, the power sector firms have continuously defaulted on their payment obligations to PSO. An average shortfall of PKR 10 billion per month has been recorded in payments from the power sector for the past six months with just PKR 5.2 billion disbursed to PSO in November.

PSO said that “A similar situation is occurring with the continuous default by Pakistan International Airlines. The national carrier has been violating its agreement with PSO by failing to make regular payments for the fuel it receives.”

PIA owes PSO around PKR 4.3 billion. While their payments have become irregular the carrier has increased its daily average fuel uplift from PKR 60 million to PKR 70 million worth of product. The national carrier had promised to pay back PKR 1 billion of its outstanding by the end of October but they not only violated this commitment but also recently stopped its daily fuel payments to PSO.

The continuous non-payment by these entities has left PSO cash strapped and unable to meet its payment obligations to both local and international suppliers. In case immediate payments are not received by the defaulting entities, import of future fuel cargoes will have to be deferred as the company has exhausted its financing sources.

(Sourced from www.thenews.com.pk)