Pakistan State Oil (PSO) continues to suffer from circular debt as the clients of the company are unable to pay the dues on time. This challenge continues to remain even though the company registered heavy profits in FY 2019-20, reported Business Recorder.
In the previous fiscal year, FY 2020-21, the company recorded an after-tax profit of Rs. 29 billion, the highest in the company’s history. During the same period, PSO’s receivables from all clients reached Rs. 402.863 billion.
The state-owned petroleum corporation managed to recover Rs. 194.283 billion from the power sector along with late payment surcharge income, however, the company is yet to receive a total payment of Rs 402.863 billion.
The biggest defaulters of PSO are generation companies that have to pay a total of Rs. 140.714 billion. These companies include Hubco and Kapco, which owe PSO Rs. 45.105 billion and Rs. 8.465 billion, respectively.
PSO also managed to reduce its cost in the year by Rs. 3.2billion, which contributed to its profitability.
The company is also continuing to suffer despite its critical role in the LNG sector. Recently, PSO has also agreed with Qatar Petroleum via G2G arrangement to supply an additional three million tons of LNG during a period of 10 years.
This contract will make PSO the largest supplier of LNG in Pakistan with a total supply base of 6.75 million tons per annum. Nevertheless, the company is facing circular debt issues in this sector as well.
The two biggest defaulters of PSO in this sector are SNGPL and PIA. SNGPL has to pay PSO a total of Rs. 164.759 billion on account of LNG supply, whereas PIA has to pay Rs. 21.974 billion on account of fuel supply.
Although the receivables of PSO are in great number, the company has started paying back its lenders. The company owes a total of Rs. 32.101 billion to different oil refineries. It owes a total of Rs. 16.836 billion to Pak-Arab Refinery Company (Parco), Rs. 4.931 billion to Pakistan Refinery Limited (PRL), Rs. 3.984 billion to National Refinery Limited (NRL), Rs. 3.848 billion to Attock Refinery Limited (ARL), Rs. 1.100 billion to Byco, and Rs. 1.403 billion to Enar.
PSO is also the largest importer of oil in Pakistan. It owes Rs. 129 billion on account of LC payments for oil and LNG to Kuwait Petroleum.
Despite all of the aforementioned challenges, the company has shown tremendous growth. The liquid fuels of the corporation increased by 21.9 percent in the last year. PSO has also achieved its highest-ever volume of 7.6 million tons in the white oil segment despite the decline in the kerosene oil and jet fuel industry.
PSO currently holds a market share of 46.3 percent in liquid fuels, whereas the market share of the white oil segment adds up to 45.2 percent.