A delay in the payments of outstanding dues by government organisations has exposed Pakistan State Oil (PSO) to a liquidity crunch as the total receivable balance of the state-owned oil giant (PSO) soared to Rs 269 billion.
According to details, default amount under the seven day credit arrangement currently in practice has gone up to Rs 29 billion and is increasing because of a negligible release of funds from both the government and the Pakistan Electric Power Company (PEPCO), contributing to the increasing deficit.
“As a result, as of January 25, 2017, the total receivable balance of PSO is Rs 269 billion (including FO, LNG, PDC and late payment charges of Rs 60 billion),” a PSO official said.
Additionally, PSO has incurred an interest of Rs 7.2 billion in 2015-16 and Rs 3 billion in the first half 2017, further impacting the cash flow of the organisation. The amount is to be reimbursed at the earliest by the Ministry of Water & Power, PSO said in a letter issued on January 25.
PSO is ensuring uninterrupted fuel oil supplies to the power sector in line with government directives. However, the continuous increase of receivables balance is of serious concern. The company urgently seeks the release of money from the petroleum, finance, water and power ministries to avoid any untoward incident.
Taking cognizance of the increasing receivables balance, PSO’s top man has sent a letter to the secretary of the ministry of water, raising serious concerns over the increase of the receivable balance.
He has informed the government that the entity is facing a severe liquidity crunch, has utilised all its borrowing lines to the maximum, and is unable to get more credit to ensure the continuation of its operations. “PSO’s liquidity position is expected to worsen further, as PSO has exceeded its bank borrowing by Rs 9 billion and in the next 10 days PSO needs to make payments of Rs 25 billion against international LCs, falling which default is imminent,” said PSO Managing Director Sheik Imran-ul-Haque.
Imran-ul-Haque also requested the power ministry secretary to arrange the overdue balance of Rs 48 billion to PSO for LNG, FO and PIA, and simultaneously arrange a schedule for the payment of the remaining balance, failing which supply chain disruption is expected, along with repercussions in the country due to stock out and non-payment to Pakistan Railways and refineries.
