Sunday, December 26, 2010

PSO’s oil stocks recede to 11 days of national requirement

ISLAMABAD: The state-run company, Pakistan State Oil (PSO), is in financial straits these days, reducing its oil stocks to 11 days of the national requirement.

The PSO is left with only three-day petrol reserves while the diesel stocks can last for 11 days and the situation can further deteriorate if the company’s receivables of Rs 130 billion are not paid in time,” an official of the PSO said Wednesday.

The official said PSO had so far received only Rs 34 billion out of the Rs 41 billion approved by the prime minister to be released for the PSO.

Similarly, the official said that PSO’s payables had swollen up to Rs 116 billion - Rs 80 billion to refineries while Rs 36 billion to be paid to the international oil suppliers.

The source said the company was about to cross the borrowing limits and if the PSO was not bailed out and left defaulting on its payables then implications could affect the entire petroleum sector. On the other hand, the circular debt has also affected oil refineries forcing them to produce at low capacity.

“The circular debt has hit the oil refineries manifold, forcing them to operate at low of their capacities,” said an official of an oil refinery. The sluggish repayment process has left the oil refineries in the lurch as marketing companies were importing oil at their own expense, he added. These companies were not clearing their payables of the local refineries, rather they were spending billions of dollars on oil import, he added.

“The huge oil imports are being made at the expense of local refineries, which are operating under capacity due to the prevalent circular debt, creating serious liquidity crisis for them,” the official observed. He said the refineries are close to crossing the borrowing limit from banks and not in a position to import crude oil for a long period. The oil refineries have also called for working out a fair and consistent pricing mechanism to help the petroleum industry survive.

Islamabad—The Public Accounts Committee (PAC) on Wednesday was informed that country was left with the lowest oil reserves as well as the Pakistan State Oil (PSO) could default if it would not provided with Rs 60 billions immediately. The Accounts Committee was further briefed that the vicious circle of circular debt was hampering the performance of PSO and other vital national organizations. PAC expressed serious concerns over the deregulation of prices of the petroleum products in the country which failed in providing relief to the masses.

MD PSO Irfan Qureshi told NA body that country was left with oil reserves for 72 hours, diesel for 11 days and motor gasoline oil for 4 days while furnace oil reserves were in sufficient quantity. He said that performance of PSO to cater the national requirements had been marooned due to vicious circle of circular debt. “PSO is burdened with loans of Rs 40 billions, but its receivables are Rs 129 billions” he said adding, “Remarkably Rs 116 billions are payable to PSO by power generating companies”.

He commented that six months’ oil supply line in the country would be suspended and PSO would default in case it would not be provided with Rs 60 billions immediately. He observed that measures for deregulating the prices of the petroleum products would not prove effective without a mechanism to link them with international market.

MD Pak Arab Refinery LTD (PARCO). Rasheed Jung told the committee that receivables of PARCO were Rs 36 billions and out of this Rs 34 billions were from PSO. He further observed that the vicious circle of circular debt was the only hurdle in the good performance of the national organizations. Secretary Ministry of Petroleum and Natural Resources Kamran Lashari apprised the committee that temporary measures to tackle with the issue of circular debt would not prove effective because only long term and durable steps could be result oriented.

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