KARACHI  - Pakistan State Oil (PSO) has taken a decision to discontinue supplies to Pakistan International Airlines Corporation (PIAC) based on the latter’s continuous defaults on payments to PSO. 

Due to the various payment defaults by the airline, the arrears against PIAC have built up to Rs 7.1 billion.

Accordingly, PSO served a notice dated November 20th, 2013 upon PIAC, referring to the breach of the terms of their FSA, and required them to pay their outstanding amount within seven days failing which PSO would be constrained to avail all remedies available under law and the FSA including to stoppage of supplies.

Although PSO had served notice to PIA, PSO delayed the discontinuation of supplies to PIA based on government’s directives. Considering PIA’s financial difficulties the government directed PSO not to discontinue fuel supplies to PIA at this point in time.

However, PSO has apprised the government that the company has undertaken the administration of the contract with PIA on the principles of business in line with the provisions in such contracts.

PSO has expressed its inability to delay the stoppage of fuel supplies to PIA for longer time unless PIA expedites the payment to PSO. In case of further delay in clearance of dues, PSO will be left with no option but to stop supplies to PIA.