Pakistan oil retailer PSO seeks $510 mil from government to pay suppliers
Karachi (Platts)--12Feb2013/542 am EST/1042 GMT
Pakistan State Oil, the country's largest retailer of refined oil
products, is seeking Pakistan Rupees 50 billion ($510 million) from the
government to pay its dues to international and local suppliers, a company
official said Tuesday.
The company has asked the Ministry of Petroleum and Ministry of Finance
to immediately release funds against dues owed to PSO by power plants for
supplying furnace oil, the PSO official said.
Local power plants and utility companies owe PSO a total Rupees 158.43
billion, while PSO owes local refineries a total of Rupees 34.15 billion and
international suppliers a total Rupees 99.3 billion.
"We have reduced supply of furnace oil to power plants from 14,000
mt/day to almost 8,000-10,000 mt/day as of Tuesday, as outstanding payments
has made importing fuel oil difficult," the official said.
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The company supplied around 22,000 mt/day of furnace oil over December
2011-February 2012, but has slowly reduced supply to power companies since
then, he said.
Pakistan's furnace oil demand for 2012-13 [July-June] is seen at 9
million mt, of which domestic supply is estimated at 2.5 million mt with the
balance coming from imports, the official said.
Demand for furnace oil is expected to rise for fiscal 2013-14 by 12-15%
year on year, as the government plans to bring online new power plants, said
an energy expert.
Pakistan's oil sector has been caught in a spiraling circular debt
since the middle of 2008. Circular debt refers to a situation under which
state-held utilities default on payments to oil marketing companies. These
companies are then unable to pay refiners their dues, who then have trouble
financing their crude oil purchases and running their plants. The total
circular debt currently stands at around Rupees 425 billion.
--Haris Zamir, firstname.lastname@example.org
--Edited by Haripriya Banerjee, email@example.com