ISLAMABAD: With its receivables rising beyond Rs105 billion, Pakistan State Oil (PSO) needs at least Rs57 billion between now and April 28 to avoid default on international payments for oil imports and ensure smooth oil supplies in the country.

“We have been forced to cut down oil imports and are inviting much lower tenders than usual for furnace oil and diesel to avoid immediate default,” PSO Managing Director Irfan K. Qureshi told National Assembly’s Standing Committee on Petroleum and Natural Resources on Wednesday.

“Our interest on bank loans is eating up our profits. We are very near to default. We need Rs57 billion between now and April 28 to retire letters of credit (LCs) to foreign suppliers including Kuwait for furnace oil and diesel we have already imported. If we don’t pay, Pakistan will default on foreign payments and it would be a big humiliation for the country”, he told the parliamentarians belonging to a cross section of political parties who awfully looked at him.

The members of the committee led by its chairman Sheikh Waqas Akram unanimously decided to seek jointly an immediate meeting with the Prime Minister to sensitise him about the looming oil supplies crisis that could create worse than any other political crisis.

They asked PSO chief whether any solution could be expected or the finance ministry was helping the company out of the crisis, Mr Qureshi said he had been demanding payment of Rs105 billion and ‘the finance ministry agreed on Wednesday to release Rs5 billion’. “This can give respite for a couple of days. We don’t see any way out. It is pathetic situation. We are hard pressed”.

Mr Qureshi blamed the power companies for non-payment of over Rs95 billion to PSO that he said were also hampering expansion plans, oil imports and improvements in petroleum products.

He said Pepco alone owed over Rs45 billion, followed by Hubco with Rs37 billion and Kapco with more than Rs10 billion. He said the PSO had to roll over its loans with 19 banks on a daily basis, resulting in continuous increase in interest cost.

His position was strongly endorsed by senior officials of the Petroleum Ministry. “These (power) companies are doing business to the detriment of our interests,” said Secretary Petroleum Kamran Lashari.

He said PSO was unable to pay Rs35 billion to Pak Arab Refinery that was also forced raising commercial loans at over 8 per cent interest rate.

“The situation has a long-term impact on the country’s image. Foreign investors are reluctant to invest in these companies saying their accounts are in bad shape”, Mr Lashari told the standing committee.

Additional secretary Ejaz Chaudhry said that Wapda, Railway and PIA were major companies that were defaulting in payments to oil and gas companies and refineries and resulting in vicious cycle of circular debt.

PPP MNA Jamshed Dasti referring to a Dawn report asked if it was true that oil products were being exported to Afghanistan at lower rates than sold in Pakistan. A representative of the petroleum ministry replied in affirmative and said the exports were exempt from 16 per cent GST and Rs10 per litre petroleum levy.

Mr Dasti and PML (N) MNA Hanif Abbasi deplored that the government was charging taxes to its own people but not to the United States of America.

At the meeting, gas supplies companies particularly Sui Northern Gas Pipelines Limited came under criticism from the parliamentarians for allegedly sending exaggerated gas bills to the consumers. They said they were receiving thousands of complaints every day for such bills.

Hanif Abbasi said he would sue the company for overcharging him and his voters.

SNGPL Managing Director Rashid Lone, who is on ninth extension, said he would look into the specific complaints but most of the higher bills were because of misuse of natural gas for geysers and heaters that attract higher slab rates for higher consumption.

He said the company had now introduced automatic meter reading devices in the major cities that also took photographs of meters that would make the system more transparent.