The cash-starved Pakistan State Oil (PSO) cut off fuel supplies to power companies on Thursday for non-payment of dues in a bid to avoid default as its overdraft touched Rs.40 billion.
The PSO has been supplying approximately 23,000 MT furnace oil to the power companies on daily basis.
“The last payment was received on January 7 from the power companies. We have received no further payments despite several rounds of meetings, which forced us to stop plug supplies to the copmanies, including Wapda, Kapco and Hubco,” a PSO official said.
“The PSO’s total receivables have swelled to Rs 158. 65 billion, including Rs 47.22 billion from Wapda, Rs 73.29 billion from Hubco and Rs 28.86 billion from Kapco. If we do not get these dues we will not be able to pay Rs.85 billion to the refineries or Rs 43 billion to the international suppliers and likely default in payments against letters of credit,” the official said.
The source said that the PSO had exhausted all its resources for financing future product supplies as it was not able to make timely payments to its suppliers due to non-payment from the power companies.
The official said the PSO as the country’s largest energy company was cognizant of its responsibilities and had supplied furnace oil uninterruptedly to the power companies in the past.
But the daunting circular debt and mounting receivables forced the company to suspend supplies, he said.
He said despite such challenges the PSO has posted sound results in the first half of financial year 2010-11.
The company has marked history as after tax its earnings recorded at Rs 7.13 billion in first half of the financial year 2010-11 in comparison to Rs 5.08 billion in the same period of FY 2009-10 despite the circular debt which stood at Rs 127 billion at December 31, 2010, a company official said.
The official said that the company’s sales revenue for the given period reached Rs 427 billion as compared to Rs. 414 billion during the corresponding period last year.