Fuel supply to two plants resumes Power crunch averted as PSO gets Rs12bn
By Ahmad Fraz Khan and Kalbe A
LAHORE / ISLAMABAD, Sept 18: A major power crisis was averted on Saturday after the federal government released Rs12 billion to Pakistan State Oil (PSO), which, in turn, restored oil supplies to the power sector, especially the Hub Power Company (Hubco) and Kot Addu Power Company (Kapco).
Apart from the federal transaction, the ministry of Water and Power and the Pakistan Electric Power Company (Pepco) have promised to pay Rs24 billion and Rs3 billion next week, bringing the total payments to Rs39 billion.
The PSO also informed the ministry of petroleum that the petrol supply position would start improving by Monday. The supplies were delayed because of problems arising out of floods and Eid holidays.
The PSO supplies around 6,500 tons of petrol daily around 45 per cent of the countrywide demand.
Central and southern Punjab faced petrol shortages because of shutdown of Parco which supplies up to 1,800 tons of motor gasoline daily, PSO officials told the ministry.
Sources in the ministry said that Parco was closed after floods and it was expected to resume work on Monday or Tuesday, which would improve petrol supply situation.
Had the supply of fuel to Hubco and Kapco not resumed, they could have jointly created a generation loss of around 3,000MW, forcing Pepco to resort to six-hour loadshedding on this head alone, taking the total loadshedding beyond eight hours a day.
According to Pepco officials, the federal money transfer was part of tariff differential subsidy payments that the federation owes to the sector for the last two years. Under this head, the federal government owes Rs135 billion. Out of this, it transferred Rs12 billion on Saturday.
According to PSO, the ministry of Water and Power has pledged to pay Rs24 billion once Pepco makes the payments.
Not confirming the payment promise directly, a spokesman for the ministry of Water and Power said: The ministry is committed to arrange all payments that its subsidiary and other private companies in the sector owe to PSO so that the country continues getting smooth supplies. It will ensure in future that regular payments are made to PSO so that generation does not suffer any kinds of loss. Pepco managing-director Tahir Basharat Cheema claimed that the company would make Rs3 billion payment next week (Rs1 billion each on Wednesday, Thursday and Friday) to PSO.
He said: The oil supplies have been restored, but the company also has spare generation to cope with the situation. Had it not been for floods, the company was making regular payments to PSO. About the cumulated payments that PSO is claiming to be around Rs149 billion, he said that the dues were not new, but lingering on for the last two year because the federation had not cleared tariff differential subsidies for 2007-08 and 2008-09.
PSO spokeswoman Mariam Shah confirmed release of Rs12 billion and also other promises made by Pepco and the ministry of Water and Power. She said the federal finance division had not shared the payment apart from Rs15 billion.
PSO has restored supplies to the power sector because of national interest rather than the quantum of payment.
The sector owes Rs149 billion, and payment of Rs12 billion and promises of Rs27 billion hardly merit restoration of oil supplies. It was done only to let the power sector run smooth because the stoppage could have hurt the country badly, she said.
Ms Shah said: The PSO is by no means out of woods. It has to order oil imports for October and November, and it will only be possible for it if the government and other private entities (Hubco and Kapco) share their payments schedule with the company so that it can plan imports for smooth supplies. The financial crisis faced by PSO is mainly because of the power generation companies have to pay more than Rs141 billion to PSO out of the total outstanding of around Rs160 billion faced by the company.
A PSO official said that Hubco had to pay around Rs62.57 billion to PSO and Kapcos outstanding was Rs31.4 billion and Wapdas power generation companies had to pay more than Rs47.25 billion to PSO.
PSO supplies 2,500 tons furnace oil per day to Kapco and 5,000 tons per day to Hubco to meet their entire daily requirements.
PSO is also under stern pressure to clear its dues to oil refineries and Kuwait petroleum for imported petroleum products.
Fuel supply to two plants resumes Power crunch averted as PSO gets Rs12bn
Ah this circular debt sucks!