ISLAMABAD - The Finance Ministry on Thursday decided to release Rs 10 billion for cash-starved Pakistan State Oil (PSO), saving it from default on payments to the international fuel suppliers.
The Finance Ministry has decided to release Rs 10 billion for the Pakistan State Oil keeping in view its financial maladies, Rana Assad Amin, official spokesperson and advisor to the Finance Ministry confirmed to The Nation. The federal government has saved PSO from likely default. Earlier PSO was on the verge of default on payments to its international fuel suppliers if it had failed to arrange Rs15 billion by Thursday. However, finance ministry decided to release Rs 10 billion on Thursday and assured PSO to make further releases in the days to come if needed.
According to reports, last week, the PSO had urged the federal government to release Rs15 billion so that it could save itself from defaulting on its LC payments and square with its creditors. PSO’s troubles have multiplied since two banks refused to issue letter of credit to the state-run oil company.
Experts say PSO’s failure to pay up will have serious repercussion for the economy of the country and may aggravate the prevailing energy crisis. Sources said that different organizations owe PSO a whopping Rs160 billion, of which Rs140 billion is owed by the power sector.
Sources said that PSO urgently needs Rs 50 billion to retrieve back-to-back Letter of Credits (L/Cs) of furnace oil which is due this week. Therefore, sources said that PSO would further need Rs 40 billion in the ongoing month of February to open the LC.