LAHORE: The Pakistan State Oil (PSO) petrol supply will get on track shortly as authorities have taken up the issue on war-footing.
“We foresee that the phenomenon is very short term as the authorities have already started an action plans to settle the issue,” official sources said here the other day.
The Ministry of Finance (MoF) has released Rs 17b illion and has also ensured supply to PSO from local refineries, they added. “Keeping in view these steps, we expect a minimal impact of oil shortage on PSO’s earnings during 3QFY15. In addition to this, government has also issued a notification to NEPRA announcing a tariff increase of 98 paisa which will go to Universal Obligation Fund and in turn will be used to pay circular debt of the energy chain where PSO will be the primary beneficiary,” they stated.
The sources said PSO is facing severe liquidity issues which in turn are hampering its ability to keep oil supply uninterrupted in the country. It is pertinent to note that PSO provides 65% of the petroleum products with a retail outlet network of more than 3,500.
On the other hand ,reports say outstanding receivables of PSO are consistently hovering around Rs200 billion mainly owing to significant receivables from power sector. Sources further added the LCs limit of PSO is also exhausted and the company is not in a position to open further LCs with banks due to its deteriorating credit history with banks. Furthermore, the company has also paid $US8.2million on account of delay in use of vessels and delay in LC opening.
To tackle these cash flows problems, little support from MoF was observed, they said. “Due to above mentioned liquidity problems; PSO fails to buy oil on timely manner and currently is running out of inventory. As a result, the company is unable to smoothly supply oil to different sectors of the economy and thus its revenue and profitability may suffer in 3QFY15,” the sources underscored. Average per day sale of the company during FY14 & 1QFY15 was Rs4 billion which the company may lose per day in case of supply halt.
In addition to this, furnace oil supply disruption means further rise in load-shedding and Mogas and HSD supply halt means slower down in economic activity which is negative for industries and economy as a whole, it was learnt.
