Government set to clear Rs 11 billion of KESC dues to PSO

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Highlights - Corporate News

The government has decided to clear outstanding dues amounting to Rs 11 billion of Pakistan State Oil (PSO) against Karachi Electricity Supply Company (KESC) on account of furnace oil supply from 2009-13. This was decided here at a meeting on Thursday, which was attended by senior officials of the Finance Ministry, Ministry of Water and Power and Ministry of Petroleum.

Sources told Business Recorder that the government had directed PSO in summer 2009 to supply furnace oil to KESC for increasing power generation, curbing power outages. It was agreed that the power company will pay gas price to PSO, while the federal government will pay the difference between furnace oil and gas price. Sources said that PSO is experiencing a liquidity crisis because KESC along with entire power sector was not paying their outstanding dues as per commitments for fuel supplies. Sources said that PSO was considering of curtailing oil supplies to the power utility.

In 2009, PSO and KESC signed a Fuel Supply Agreement, according to which PSO will have to supply up to 33,000 tons of furnace oil to KESC every month for 10 years. Finance Ministry had committed that it would pay the price differential of supplying furnace oil to KESC on gas price in winters as well as summers, but the payment due in this regard has not been received hitherto.

The PSO said that its total receivables against KESC stand at Rs 13.2 billion, of which KESC has to pay Rs 9.3 billion for furnace oil supplies and the government has to pay the remaining Rs 3.9 billion on account of price differential for subsidised supplies in 2010.

The power sector is leading defaulter of the National fuel supplying company. The Hub Power Company Limited (Hubco) is the leading defaulter of PSO with Rs 56.86 billion outstanding dues, followed by Water and Power Development Authority (Wapda) with Rs 48.28 billion, KESC with Rs 10.8 billion and Kot Addu Power Company (Kapco) with Rs 10.62 billion outstanding dues.

The company is to receive Rs 1.5 billion on account of audited price differential claim of High Speed Diesel (HSD), over Rs 3.407 billion on account of price differential on Low Sulphur Fuel Oil and High Sulphur Fuel Oil (LSFO/HSFO), Rs 1.36 billion on account of price differential on imported PMG and Rs 4 billion price differential under GLMP and Rs 1.419 billion on account of financial charges from KESC and National Transmission and Dispatch Company (NTDC). The national fuel supplying company has to payback Rs 72 billion to Kuwait Petroleum Company Limited and other international fuel suppliers on account of Letters of Credit (L/Cs) payments. PSO''s total payable to local and international fuel suppliers stand at Rs 104 billion.

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