ISLAMABAD

Pakistan State Oil (PSO) has asked the government to arrange payment of Rs 42 billion, overdue by power sector, immediately and warned that in case of nonpayment to it, the oil supply chain may break down, leading to a grave crisis.

An official of the Ministry of Water and Power told The Nation here on Monday that PSO has written a letter to ministry asking to resolve the payment issue with the power sector immediately as the PSO could face default on its payments of about Rs 9.1 billion. Unless the power sector paid the required Rs 42 billion, PSO will not be able to import furnace oil, diesel and LNG in the country, the official informed.

“You cannot provide furnace oil and LNG free of cost to the power sector companies with a hallmark of mismanagement and corruption,” the official said. PSO has supplied furnace oil and LNG to power sector worth Rs 31 billion but received payment of only Rs 12.9 billion while the remaining Rs 18.1 billion is still pending, the official elaborated.

The official said that PSO is facing default as it owes money to oil refineries for the supply of oil, for the import of furnace oil and to Qatar gas for the LNG. Pakistan State Oil will not be able to receive any fresh consignment in case the payment was not made, the source maintained.

On the peak of oil crisis this year PSO was paid Rs 40 billion, from its debt, on emergency bases, the source maintained adding that actually PSO received only Rs 16 billion in real term, as soon after that the power sector hold the payment of Rs 24 billion for the supply of furnace oil.

Now once again the overdue payment to power sector reached to Rs 31 billion for the supply of furnace oil and LNG but despite several reminders only Rs12.9 billion was paid, the source maintained adding that this is in addition to Rs 193 billion debt the power sector owes to PSO.

To avoid default state-own oil utility has utilised its maximum borrowing capacity and received Rs 3.5 billion from banks, but the banks will not provide any new loans because of its financial position and legal obligations, the official said.

At the moment the State Oil has no other option but totally relying on the payment from power sector and asked the government to release Rs 24 billion from the previous debt, paid in January as part of emergency release of Rs 40 billion to PSO but was hold back, and the remaining Rs 18.1 billion from the latest overdue bill, the official explained.

If government wants to continue undisrupted flow of oil supply it should immediately move to streamline the payment system. If the payment situation is not streamlined then eventually the supply chain would break down as it did in January this year, the official warned.