KARACHI – A senior official at Oil Companies Advisory Council (OCAC) said that the circular debt, that choked cash flows of the country’s biggest fuel distributor Pakistan State Oil, caused the severe petrol shortages that had hit part of the Punjab province last month.
The PSO has a 49 percent share of the country’s gasoline marketing business, ahead of major multinational players like Shell Pakistan and Caltex Pakistan. “A number of factors were behind the January petrol shortage, including circular debt, consumer behavior, weather conditions in Punjab and off-scheduling of arrival and berthing of tanker vessels,” the official briefed newsmen, while requesting anonymity.
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In December last, a bank dishonoured a PSO’s letter of credit due to nonpayment of outstanding amount by the company. The state-owned PSO had whined nonpayment of at least Rs200 billion by the government institutions and departments to the company. The dramatic fall in the global oil prices, which led to a monthly downward revision in domestic prices, acted like a giant tax cut to the consumers and they took advantage of low prices to spend more. Oil price has fallen by more than 50 percent since last June.
Another OCAC official said that demand of petrol, which was recorded at 12,300 tons/day in December 2014, surged to 15,500 tons/day in January 2015 and is likely to settle at 16,500 tons/day in February.
