ISLAMABAD: The finance ministry on Friday paid Rs8 billion to Pakistan State Oil to reduce its circular debt, however the largest oil marketing company has expressed it concerns over the issue.
In a meeting with the officials of petroleum ministry and the finance ministry and the PSO management here on Friday, it was acknowledged that the circular debt had been caused because of mismanagement and recovery problems by Pakistan Electric Power Company (Pepco).
The PSO has asked the government to separate the electricity sector from the oil and gas sector to resolve the lingering issue of circular debt.
“Overdraft from the banks has reached Rs14.12 billion as on January 7, 2010,” the PSO management informed the finance ministry in a letter, adding its total liabilities has reached to Rs86.07 billion.
Sources in the finance ministry told Dawn that the receivables of the PSO stood at Rs77.53 billion, whereas the PSO had also expressed concerns over the recent rotation of Rs8 billion by the finance ministry.
Sources said that PARCO had to pay Rs7.5 billion to the government on various accounts and as the due date approached PARCO management informed the finance ministry that they faced liquidity crunch.
“PARCO management was directed by finance ministry to obtain Rs8 billion loan from National Bank for 4-5 days,” sources said.
The finance ministry cleared Rs8 billion of PSO’s circular debt and also directed the state-owned company to reduce PARCO’s debt by Rs8 billion, the sources added.
The PSO management said that such book rotation of small amount was only creating confusion. “This arrangement should be conducted at a larger scale to clear the books of whole oil and gas sector.”
The PSO stated in the letter it had to receive a total of Rs32.15 billion from Wapda, Rs24.97 billion from Hubco, Rs12.19 from Kapco and Rs1.3 billion from the power holding company.
The other receivables include Rs2.62 billion from PIA and Rs3.66 billion from the government in terms of price differential claims, it added.
The letter said PSO had to pay Rs21.56 billion to PARCO, Rs11.38 billion to PRL, Rs8.83 billion to NRL, Rs12.43 billion to ARL, Rs4.85 billion to Bosicor Refinery and the payments due on January 25 to Kuwait Petroleum Company amounts to Rs10.08 billion.
The PSO letter added that the refineries were facing serious financial problems in clearing their dues to Oil and Gas Development Company (OGDCL).
The PSO said that its major receivables amounting to Rs70.61 billion stood against the electricity generation companies, which are faced with payment problems from the electricity distribution companies.
PSO has suggested to the finance ministry that Rs70.61 be shifted to the power holding company of the government and the books of oil and gas sector may be cleared.
“The power holding company may deal with the power sector independently without incurring financial loss to the oil and gas sector,” sources said.
The ministry of water and power is planning to launch an aggressive campaign to improve recovery drive by the eight electricity distribution companies.
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