Pakistan refineries halt supplies to PSO over $1 bil unpaid bills
06 September, 2012
KARACHI: Domestic refineries have halted oil product supplies to Pakistan State Oil, the country's largest oil marketing company, over the non-payment of Pakistan Rupees 95 billion ($1 billion), a PSO official confirmed Wednesday.
"Supplies from local refineries have been stopped due to the non-payment of oil bills, as we are not receiving funds from the government and electricity producers, which owe in excess of Rupees 240 billion," the official was quoted as saying by Platts.
Officials at Attock Refinery Limited and Pak-Arab Refinery Limited or Parco confirmed supplies had been halted.
PSO owes Rupees 94.86 billion to local refineries; Rupees 32.62 billion to Parco, Rupees 17.12 billion to Pakistan Refinery Limited, Rupees 10.34 billion to National Refinery Limited, Rupees 31.276 billion to ARL and Rupees 2.6 billion to Byco.
It owes a further Rupees 99.317 billion to international suppliers.
Local refineries supply about 30% of Pakistan's 20 million mt/year (400,000 b/d) of oil products demand, with the majority met through imports.
The country has around 13 million mt/year of refining capacity, which is currently running at only 50-60% due to a circular debt crisis that has crippled the domestic energy sector.
Pakistan's oil and gas sector has been caught in a spiral of circular debt since mid-2008, with state-held utilities defaulting on payments to oil marketing companies, which in turn are unable to pay refiners their dues, which then have trouble financing crude oil purchases and running plants.
The total value of outstanding dues currently amounts to around Pakistan Rupees 425 billion, and has also affected the liquidity of local exploration and production companies, restricting drilling activity.
PSO is owed Rupees 246 billion by electricity producers including the Water and Power and Development Authority, Hub Power and Kot Addu Power.