ISLAMABAD: Pakistan State Oil’s financial woes continue as its receivables are said to have swelled over Rs300 billion.
The state-owned oil marketing giant is desperately starved off cash, as its finances keep getting squeezed due to soaring receivables and payables, which threatens its financial stability.
In a bid to ease PSO’s financial crunch, Finance Division is considering releasing Rs35 billion after the state-owned oil giant like before raised warnings of imminent default in the country’s oil and gas supply chain, reported Express Tribune.
An official said the proposal was under consideration to release Rs35 billion by the Finance Division, but it wasn’t a viable solution. He added PSO required Rs60 billion on an immediate basis to provide uninterrupted oil supplies and Ministry of Energy is adamant for a permanent resolution to the menace of circular debt.
Also, PSO is importing over 500 million cubic feet of Liquefied Natural Gas daily from Qatar, which could also create troubles in case if its cash flows position doesn’t improve.
This isn’t anything new regarding PSO and viciousness of circular debt that has crippled energy supply chain since years now. Power sector remains a major defaulter of PSO as billions are stuck in supply chain because of ban on consumption of furnace oil in power plants.
To ease PSO’s woes, Petroleum Division approached Cabinet Committee on Energy (CCOE) in its last meeting. It warned the committee about outstanding bills against power producers had further worsened financial position of PSO and further delays in payment could alight a crisis.
Petroleum Division proposed Aviation Division, Power Division and Pakistan International Airlines (PIA) should clear its dues at the earliest to ensure a lifeline for PSO and improved its liquidity and avoid collapse of supply chain.
But officials said CCOE also failed to come up with a solution to control rising PSO receivables, which were at an all-time high. Power producers owe PSO over Rs195.5 billion, which includes Rs64.40 billion accumulated after establishment of seven-day credit arrangement.