Pakistan State Oil in liquidity crunch as receivables soar to nearly PKR 900 billion

Pakistan State Oil's (PSO) financial crunch has exacerbated after its receivables soared to nearly PKR 900 billion ($3.12 billion), data received by Nukta showed.

The company, which sources, stores and markets petroleum and other products in the country, is owed PKR 552 billion by the Sui Northern Gas Company for LNG shipments, according to data from the Ministry of Energy.

The government typically buys 120 to 140 cargoes of LNG every year. However, due to declining electricity demand in recent months, five LNG cargoes have been deferred from Qatar.

Talks are underway to defer five more cargoes, which may then be imported next year subject to demand.

Meanwhile, government-owned power generation companies have to pay PSO PKR 158 billion for purchases of furnace oil.

Though the government stopped producing electricity from expensive furnace oil over two years ago, but to maintain buffer stocks, these outstanding purchases (and their payments) have piled up.

Data from the country's power regulator reveals that not even one gigawatt-hour of electricity has been generated from furnace oil in the last two months.

Moreover, the national flag carrier — Pakistan International Airlines (PIA) — also owes PKR 89.5 billion to PSO.

However, the amount is largely due to a backlog in clearance, since the airline has been paying PSO for daily or weekly purchases of jet fuel promptly.