Wednesday, March 30, 2011

Full of hot air

PSO faces $30m loss on FAL Oil non-performance 

ISLAMABAD: The cash-strapped Pakistan State Oil (PSO) management is seriously contemplating to encash the performance bond of M/S FAL Oil, which reportedly remained failed so far to sell cargoes of fuel oil to the company, TheNation learnt.

M/S FAL Oil has caused a huge loss to the national exchequer and PSO`s losses due to FAL non-performance of their contractual obligations has led to a loss of over $30 million, ?sources said adding that M/S FAL Oil contracted to sell PSO cargoes of fuel oil during Nov-Dec. 2010 and to date have not fulfilled their contractual obligations.

?According to PSO`s own tender if a supplier is over six days late in delivering the cargo they can cancel the cargo and encash their performance bond, however, M/S FAL Oil is five months late the performance bond of M/S FAL oil has not been encashed worth $7.8 million? they said adding that the amount of the performance bond held by PSO is expiring on March 31st, 2011.

Sources further informed that PSO wrote a letter to the Standard Chartered Bank in Karachi to en-cash M/S FAL Oil`s performance bond in March around the 18th of the month and then all of a sudden asked the bank not to do so. They also told that the Managing Director of PSO received a call from the government big wig warning him serious consequences for the PSO management if performance bond was encashed. They further added that MD PSO succumbed to the pressure and informed the Managing Committee of PSO which had approved the encashment of the performance bond that PSO would no longer go ahead with encashment

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