Pakistan State Oil (PSO) has eased off its debt burden through repayment of Rs 43.8 billion, on the account of loans to various commercial banks through the returns of Pakistan Investment Bonds (PIBs).
The borrowing requirement emerged when various power generation companies were unable to pay their dues to PSO against the supplies of oil products, especially furnace oil to the Oil Marketing Companies.
According to official details, PSO subscribed to PIBs in July 2012 under the Circular Debt Resolution plan to settle its dues. The face value of PIBs stood at Rs 43.83 billion against the coupon rate of 11. 50 percent.
PIBs attained maturity in the recent days, after a period of five years, and therefore PSO decided to cash in the returns to pay off its proceeds.
The state-owned company raised funds from PIB and paid off to different banks to clear its due.
Various banks including Standard Chartered Bank, United Bank Limited, Samba Bank, CitiBank and Habib Bank Limited and MCB Bank were onboard with PSO for financial dealings related to borrowing, deposits, and saving of funds.
These banks provided sufficient liquidity to the stated-owned oil marketing company to run its operations in spite of the fact that PSO encountered financial constraints due to the non-payment by power generation companies against oil supplies.
The companies that owed dues to PSO include HUBCO, KAPCO , WAPDA and more.
It should be noted that PSO had to borrow from commercial banks at high interest rates, which significantly eroded part of its profits.