PSO to receive over Rs70b by June-end

KARACHI - The federal government is expected to provide Rs70-75 billion to the Pakistan State Oil before the end of current fiscal year with a view to resolve circular debt issue on war-footing basis. In addition to that, the government is contemplating to issue TFCs and Sukuk bonds. Talking to The Nation, Atif Zafar Energy Sector Analyst JS Research said the energy sector is going through a severe liquidity crisis, however, receipt of $457 million from the US under the Coalition Support Fund (CSF) and lower than budgeted utilisation of the Public Support Development Programme (PSDP) would provide the govt the required liquidity to infuse additional Rs70-75 billion to the system. The remaining Rs 20-25 billion deficit is expected to be bridged through another TFC or Sukuk issue. This would add up to Rs116b declared needed, to resolve the inter-corporate debt at the Energy Summit. This payment would not be the final settlement as accumulation of circular debt will continue to occur due to the governments failure to raise the power tariff by 6 percent on April 01, 2010 and commissioning of expensive rental power plants, he said. According to the estimates, the delay in the 6 percent power tariff hike is likely to add a monthly burden of Rs2.6 billion on the government. However, after the clearance of the backlog of the inter-corporate debt, this amount should remain under manageable limits, he added. He said that the payment of Rs15.6 billion to Pakistan State Oil (PSO) over the weekend is believed to be an effort to resolve the circular debt before the fiscal year-end (as promised) have truly begun. It may be mentioned here that the government has already released Rs16 billion to Pakistan State Oil (PSO). While on the other hand PSO has confirmed the receivables of Rs15.4 billion from WAPDA, Hubco and Kapco more amount is anticipated by the company in the days to come.