Energy crisis in Pakistan to worsen unless Government arranges Rs50 billion for PSO

Energy crisis in Pakistan to worsen unless Government arranges Rs50 billion for PSO

Wednesday, January 11, 2012: Pakistan is on verge of facing another energy shutdown unless the Government takes immediate step and arrange Rs50 billion for Pakistan State Oil (PSO) before January 15.

PSO, which is the Pakistan’s largest state-owned oil marketing company, has outstanding debts of worth Rs202 billion. The company owns this money numerous oil suppliers, both local and foreign, and the last date to pay letters
of credits (LCs) to these companies is January 15.

An anonymous official of the company revealed, “We need at least Rs50 billion to pay letters of credits (LCs) due on January 15. We have curtailed the fuel supply despite several warnings to the power companies about our critical
financial position.” He further added that the payment had already been delayed several times due to the company’s cash flow problems.

PSO has reduced the supply of oil to power companies by 30% percent, unless they receive the Rs50 billion from the Rs189 billion due on power companies. PSO is now only supplying 14,000 tons of oil per day to the power companies,
while their demand stands at 20,000 tons.

Pakistan current shortfall of electricity is 3,400 megawatts, or about 30% of demand. The electricity shortfall in the country, as a result of the lower fuel supply, is expected to worsen. Power production in Pakistan is already
reduced as canal systems are closed and requires cleaning which in turn affects the countries hydroelectric power production capacity.

Abdullah Yousaf, the chairman of the Independent Power Producers Advisory Council, said, “After the cut in the oil supply, [thermal] power production will also decline by 30%.”

The whole non-payment scenario is interlinked, as PSO cannot pay its suppliers because power companies are not paying the company. The power companies are not paying PSO because government entities are not paying their bills and
the government is also not paying up the amount of subsidies it has promised the power companies.

Short URL: https://www.newspakistan.pk/?p=8953

Posted by Wajahat Javed on Jan 12 2012. Filed under Business, Pakistan. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry