ISLAMABAD: Rebirth of the menace of circular debt has been causing the cash-flow constraints for Pakistan State Oil (PSO) as receivables of the country’s oil largest oil suppliers have risen to an all-time high of Rs 306 billion, it was learnt.
Sources well-aware of the liquidity front of state-owned oil giant Pakistan State Oil (PSO) informed Pakistan Today that receivables of PSO have reached an all-time high of Rs 306 billion, which reflects the continuation and mounting trend of chronic circular debt. They said PSO has repeatedly asked divisions/ministries, government line departments, corporations, and companies etc to pay back the pending dues because PSO has outstanding international and local liabilities mainly because of these receivables. And, non-payments might create an oil supply crisis in the country. However, all efforts so far made by the PSO to get its outstanding dues cleared remained in vain as the menace of circular debt is increasing with each passing day and currently, stands above Rs 800 billion. PSO has warned the government about oil supply crisis due to cash flow constraints being faced by the country’s largest oil supplier, said sources.
Officials at Pakistan State Oil when contacted said that despite all the challenges on liquidity front, PSO has continuously been supplying more than its market share to ensure an uninterrupted availability of petroleum products across all parts of the country.
“Currently our collective receivable from the power sector, government for price differential claims, PIA and SNGPL stands at around Rs 306 billion. We are constantly engaging with the Ministry of Energy, Ministry of Finance, PIA and SNGPL for the release of funds,” said an official at PSO.
Sources at Finance Ministry confirmed this scribe that PSO has been reporting to the federal government about its mounting receivables, which mostly emanating from the power sector. They said the PSO has told the government that more than Rs 67 billion is pending with power sector, while Rs 158 billion is payable to PSO by the public sector, and another Rs 25 billion was outstanding against other public-sector entities, including payables by Pakistan International Airlines (PIA) and price differential claims payable by the federal government. Similarly, Rs 75 billion is outstanding against Hub Power Company and about Rs 34 billion against Kot Addu Thermal Power Company; both depend on payments by power companies of the government to clear their dues to fuel suppliers. Again, another Rs 10 billion is reported outstanding against Sui Northern Gas Pipelines Ltd (SNGPL) on account of liquefied natural gas (LNG) supplies.
Besides, the liabilities of PSO have stood at Rs 87 billion which include around Rs 71 billion worth of letters of credit and standby letters of credit opened in favour of Kuwait Petroleum, Qatar Gas and other LNG suppliers to ensure smooth supplies. Almost Rs 16 billion is also payable by PSO to the local refineries, said sources of the finance ministry.
It is worth mentioning that Pakistan Muslim League-Nawaz (PML-N) government cleared a circular debt Rs 480 billion through a controversial scheme of cash and book payments. However, it has resurfaced again and reached above Rs 800 billion, mocking at the policies of the ruling regime. PSO’s receivables at the end of the PPP’s government peaked at Rs 220 billion in May 2013.
