ISLAMABAD: Ministry of energy has sought an immediate release of Rs108.7 billion on account of receivables to Pakistan State Oil (PSO) to protect the state-owned firm against an international default, and avert an impending energy supply chain disruption in the country, it was learnt on Thursday.
The petroleum division of the energy ministry forwarded the proposal to the Economic Coordination Committee of the cabinet, requesting immediate settlement of dues as PSO is facing severe cash flow constraints due to coronavirus-sparked lockdown. It requires Rs81.3 billion up to April 30, 2020 to retire international letter of credits to the suppliers of petroleum products and liquefied natural gas (LNG).
PSO’s receivables towards the power sector, ministry of finance and Sui Northern Gas Pipelines (SNGPL) accumulated to Rs37.9 billion, while the company’s daily cash collection from its white oil business drastically came down more than 55 percent, resulting in a severe liquidity crunch.
Furnace oil sale was already minimized because of the shift of power sector to alternate fuel. “PSO has already gone past due dates on local refineries’ payments and is also at the verge of default on various international payments,” the ministry said, recommending immediate release of Rs29.7 billion to PSO by ministry of finance on account of exchange losses incurred by PSO on foreign exchange (FE-25) loans booked on the instructions of ministry of finance.
ECC already directed the finance division to consider allocation of requisite amount in favour of PSO from next financial year.
However, keeping in view the current constraints of PSO and to avoid any fuel shortages in the country, the petroleum division recommended immediate release of the amount.
The summary to ECC recommended immediate release of Rs60 billion to petroleum division from power division for PSO, and recommended that Pakistan International Airlines might be directed to release Rs5 billion out of Rs19.5 billion payable to PSO.
Petroleum Division also recommended immediate release of subsidy to fertiliser and export sectors totaling Rs14 billion.
SNGPL is to be paid a subsidy for supply of liquid natural gas to the fertiliser sector in calendar year 2019 and the ongoing subsidised supply to five export industries. The total subsidy claim that is unpaid is Rs14 billion.
The petroleum division said the critical liquidity position of PSO could trigger a potential fuel crisis in the country, and the division is striving to improve PSO’s financial health and SNGPL has already been directed to clear PSO’s debt through bank borrowings.
The Central Power Purchase Agency released payments to GENCO-III on account of PSO’s outstanding receivables. However, GENCO-III did not release any payment to PS0 and invested Rs32 billion in Nandipur, while Rs19 billion had been retained on account of operational losses incurred by GENCO-III.