Pakistan State Oil (PSO) has asked the government to immediately release Rs 80 billion to ensure zero electricity load shedding in rural and urban areas of the country during, Sehr, Iftar timings of Ramadan month, it is learnt reliably.
Sources in petroleum ministry informed this scribe that state-owned oil giant PSO has demanded above Rs 80 bln from the government to continue electricity during Sehr, Iftar timings in the holy month of Ramadan. They said PSO has sought the release of billions of rupees to make necessary arrangements of oil to be required during the holy month to the furnace oil consuming GENCOs (power generation companies) and Independent Power Producers (IPPs). And, if the government delays the release of demanded money, it will be a challenge for the government to continue electricity during Sehr, and Iftar timings while PSO will not be in a position to supply the required furnace oil,” sources said.
According to PSO, import cycle for furnace oil is about 60 days, starting from demand placement by the power sector, then a tender advertisement, followed by tender opening and confirmation of the order of cargo and finally the arrival of cargo. Also, once the order is placed and irrevocable LCs (letter of credits) are opened, PSO cannot cancel the import cargo due to sudden changes in demand of the water and power ministry.
The sources further told that the PSO has suggested a way forward to tackle financial constraints of the oil giant. They said PSO has proposed the government to issue PIBs (Pakistan Investment Bonds) against receivables from the power sector or obtain a loan from private banks. However, a final decision to clear the circular debt of PSO will take place after a final decision of Supreme Court over the Panama Leaks case.
According to the documents, PSO’s circular debt has increased because the ministry of water and power did not pay the demanded money during the last one and a half year despite commitments and advice of the prime minister. At present, the circular debt of PSO has increased to Rs 285bln. And, if the government did not pay the required amount, a shortage of furnace oil and petroleum products might appear during this summer, sources added.
Sources also told that finance minister Ishaq Dar was upset with the tall claims of the power ministry regarding bringing improvement in the recoveries of pending dues and in the performance of power sector. They said the minister has also advised initiating an inquiry over failure in bringing improvement in the power sector despite passing four years to the rule of Pakistan Muslim League-Nawaz (PML-N) in the centre. And, the finance ministry has written a letter to the National Electric Power Regulatory (NEPRA) and sought a report over the performance of the entire power sector and the details of subsidies so far paid to the power sector for bringing improvement in the sector. “Ministry of finance is secretly conducting an inquiry against the power ministry,” sources said.
Sources also said that budgetary subsidy of the power sector for the financial year 2016-17 was Rs 118 billion which has almost been exhausted till date. And, the power ministry has asked to release further Rs 150 bln under the head subsidy to meet the demands of power sector.
It is worth mentioning here that owing to contractual arrangements and government’s directive, PSO has to maintain uninterrupted supplies to the power plants despite defaults of payments in the ministry of water and power. At present, PSO has to collect around Rs 285billion worth dues from the power sector and is faced with serious financial constraints as its outstanding dues pending with power sector are increasing with each passing day. However, Prime Minister Muhammad Nawz Sharif while presiding over a cabinet committee on energy has constituted a three-member committee to review the circular debt. This committee is mandated to find reasons behind the menace of circular debt and furnish recommendations about the recovery of pending dues of power sector besides solutions to give an end to the circular debt. Besides, the holy month of Ramadan is likely to start by the end of May and PSO is all out to get Rs 80 bn from the government to ensure zero electricity during Sehr, and Iftar timings of the month.
