Looming power shortage: PSO threatens cut in oil supply

Rs131b are the receivables of PSO against different companies. DESIGN: MOHSIN ALAM

ISLAMABAD: 

A dispute between oil marketing giant, Pakistan State Oil (PSO) and power generation companies has emerged once again due to delay in payment of dues as PSO threatened reduction in furnace oil supply, which may aggravate power situation in the country.


On Tuesday, PSO told Kot Addu Power Company (Kapco) and Hub Power Company (Hubco) that it was compelled to curtail furnace oil supply due to rising outstanding bills. Sources told The Express Tribune that PSO might default on Letters of Credit (LCs) opened for import of oil because of delay in clearance of dues by power-producing companies. “PSO’s import bill continues to increase and it is not in a position to retire LCs due to rising receivables against power sector,” a source said while quoting letters sent by PSO to Hubco and Kapco.


PSO, whose receivables have surged to Rs131 billion, has already requested the government to intervene in the matter as it immediately requires Rs69 billion to pay for maturing LCs for oil imports.


Earlier this month, the country faced a petrol shortage due to suspension of supplies from Attock Refinery Limited (ARL), National Refinery Limited (NRL) and Bosicor, prompting the need for heavy imports to meet demand.


According to sources, PSO was supplying 24,000 to 25,000 tons of furnace oil per day to power-producing companies amounting to around Rs40 billion per month. However, they said power companies were paying Rs15 billion per month to PSO and the low receipt of payments was piling pressure on the energy sector and increasing circular debt.


Sources said PSO had been demanding Rs25 billion per month on account of fuel supply but the power sector never responded to the demand.


On June 28, total receivables of PSO from different clients stood at Rs130.8 billion, including Rs30 billion from Water and Power Development Authority (Wapda), Rs54 billion from Hubco, Rs28 billion from Kapco and the remaining from Oil and Gas Development Company, KESC and Pakistan Railways.


Earlier, PSO had suspended furnace oil supply to Wapda, Kapco and Hubco in February due to non-payment of dues, but it was later restored after the government’s intervention.


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