PSO Proposes Rs. 10 per Liter Levy on Petrol, Diesel to Avoid Default

Are you a cricket fan? If so, keep yourself updated on everything related to PSL with these pages: PSL Live Score PSL Points Table PSL Schedule PSL Highlights PSL Statistics

Pakistan State Oil (PSO) has submitted to the government a cash arrangement formula that includes the imposition of a Rs. 10/liter levy on the sale of Mogas (petrol) and High-Speed Diesel (HSD), with an impact of Rs. 100 billion to be paid to it against LNG to avert default.

PSO’s Managing Director has highlighted his company’s financial affairs just days before the Economic Coordination Committee (ECC) of the Cabinet approves Rs 50 billion. He stated unequivocally that PSO may be unable to meet its payment obligations for refineries, imports, and taxes as of March 14, 2023, reported Business Recorder.

Despite rapidly increasing receivables and the resulting challenges, PSO has maintained the country’s supply chain. Since June 30, 2022, PSO’s receivables have totaled Rs. 762 billion, of which Rs. 598.586 billion is principal and Rs. 163.570 billion is a Late Payment surcharge (LPS).

Receivables from SNGPL currently total Rs. 494 billion and are a key contributor to PSO’s deteriorating liquidity position. Principal outstanding receivables were Rs. 292.3 billion out of Rs. 494 billion as of June 30, 2022. Last summer’s shortfall (July 22-October 20, 2022) was Rs. 32.2 billion, while the winter shortfall (November 22-February 20, 2023) was Rs. 105.6 billion.

This means that outstanding receivables were Rs. 430.1 billion on February 7, 2023; however, after adding LPS of Rs. 64.1 billion, total receivables were Rs. 494.2 billion.

PSO claims that in a bid to cover the deficit, it obtained Rs. 100 billion in additional bank loans against the GoP guarantee. During the summer, SNGPL diverted expensive LNG to domestic consumers. This year alone, the overall diversion in non-winter months was Rs. 32 billion, bringing the total diversion since inception to around Rs. 83 billion as of March 8, 2023.

The oil company has an outstanding exchange loss on FE-25 loans of Rs. 56 billion as a result of the rupee’s depreciation against the dollar as of March 6, 2023. The total borrowing against FE-25 loans was $880 million (June 30, 2022: $ 750 million), categorized as follows:

  1. exchange loss on FE-25 loans as of June 30, 20222 @ 204/USD, Rs. 27.8 billion;
  2. exchange loss for the year, Rs. 58.8 billion; and
  3. less exchange loss received from the MoF for this year, Rs. 30 billion.

According to PSO, a total of Rs. 178 billion is currently owed by power sector entities. It had warned the government that the default on refinery payments will begin on March 14, 2023. The company claimed that without immediate payment, it will be unable to settle international obligations.

Understandably, PSO has requested Rs. 56 billion in compensation for exchange losses on FE-25 loans, including Rs. 100 billion in cash injection by arranging financing for SNGPL.

Other immediate steps proposed by PSO to avoid default include the issuance of Sukuk/PIBs to PSO, clearing Rs. 30 billion outstanding receivables from Hubco and Kapco and allocating against outstanding receivables from Genco-III.

Other proposals sought the imposition of a Rs. 10/liter levy on the sale of MOGAS and HSD with an impact of Rs. 100 billion to be paid to PSO against LNG receivables, and the incorporation of a Master Collection Account (MCA) for LNG consumers with PSO drawdown rights.


  • Your website is littered with ads. Completely destroying the reading experience on mobile.

    Be less greedy and focus on user experience first.


  • Get Alerts

    Follow ProPakistani to get latest news and updates.


    ProPakistani Community

    Join the groups below to get latest news and updates.



    >