PSO stops supply to power firms

Admin Posts : 30 Join date : 2010-06-21 Age : 34

ISLAMABAD: With overdrafts swelling to Rs40 billion ceiling, the
cash-starved Pakistan State Oil (PSO) has decided to cut off supply to
private power companies from Sunday (August 1).

“Yes,
we would not be able to continue supply to the private entities
especially Kapco and Hubco from August 1. We have been writing to them
over the past one week and they have been very clear on our ultimatum
but no positive response has been received so far in terms of payment or
payment schedule,” a PSO source told APP on Saturday.

The
source said the PSO had exhausted all its financial resources with
overdraft touching Rs40 billion creating chances the PSO may default on
its letters of credit as well.

“The PSO total receivables soar
to Rs142 billion while the power sector owes Rs127 billion Hubco owes
Rs55.2, Kapco Rs28.5 billion and Gencos Rs43.7 billion if we don’t get
these dues we will not be able to pay to refineries or international
suppliers,” the official added.

When contacted Hubco, in a
written reply, stated, “Hubco is caught up in the unfortunate power
sector ‘circular debt’ issue where its government owned customer,
Wapda/Pepco, has built up an outstanding debt with us of over Rs70
billion and Hubco has a respective outstanding debt with its government
owned fuel supplier, PSO, of over Rs60 billion.” It added, “this
circular debt situation has been ongoing for four years with a building
trend over time of outstanding debts where the current maximum values
have been reached. Hubco completely understands PSO grave situation and
we are constantly in discussion with Wapda and relevant ministries in
Islamabad regarding outstanding payments to Hubco.”

“Despite
this situation PSO, Hubco and Wapda are closely working together as
Private Public Partners to ensure that Hubco has sufficient operational
fuel oil supplies to achieve sustained high load factors in meeting the
generation demands of Wapda. This is clearly an unsatisfactory situation
and Hubco is lobbying the government along with other power sector
participants for an urgent resolution in order to reinstate proper
business cash flows.”—APP