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Offline Farzooq

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Re: PSO -- Pakistan State Oil
« Reply #659 on: November 17, 2011, 11:37:04 AM »
Finance ministry asked to guarantee oil supply payments

By Zafar Bhutta

Published: November 17, 2011

 The entire energy sector was facing a liquidity crunch due to the circular debt. PHOTO: FILE

ISLAMABAD: As the power sector continues to default on payments to Pakistan State Oil (PSO), the Ministry of Petroleum has asked the finance ministry to guarantee the cost of oil supplies to power companies on a daily basis.
 
The petroleum ministry has also given a plan of payment for oil supplies to the power sector to avoid pile-up of circular debt that has plagued the entire energy chain.
 
Sources said that the petroleum ministry told the finance and water and power ministries that the power sector must ensure payments against oil and gas supplies through advance letters of credit (L/C).
 
The petroleum ministry also asked the power sector to place timely orders with oil marketing companies (OMCs) for the arrangement of fuel.
 
OMCs can only make supply arrangements once an L/C, backed by payment guarantee or bank guarantee, is provided to them for advance supply order, the petroleum ministry said, adding alternatively the finance ministry may guarantee the cost of petroleum product supplies by PSO to the power sector on a daily basis.
 
Petroleum Secretary Ijaz Chaudhry confirmed that the petroleum ministry has suggested a mechanism for opening advance L/C to get supplies from PSO.
 
Under the mechanism, PSO will open an L/C against supply of fuel from oil refineries and the power sector will also have to open L/C to lift supplies from PSO, he said.
 
Another official said the entire energy sector was facing a critical liquidity crunch due to the circular debt. He was of the view that the L/C-backed payment mechanism may not be successful as the power sector as well as PSO will also require money to open the L/C.
 
Total receivables of PSO stand at Rs172.79 billion, with Rs35.5 billion from Wapda, Rs73.71 billion from Hubco, Rs38.6 billion from Kapco, Rs2.73 billion from PIA, Rs285 million from Oil and Gas Development Company, Rs5.06 billion from Karachi Electric Supply Company and Rs1.10 billion from Pakistan Railways.
 
Payables of PSO have accumulated to Rs135.4 billion, of which it has to pay Rs33.47 billion to Pak-Arab Refinery Company, Rs9.86 billion to Pakistan Refinery, Rs9.48 billion to National Refinery, Rs16.68 billion to Attock Refinery and Rs2.34 billion to Bosicor
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Re: PSO -- Pakistan State Oil
« Reply #659 on: November 17, 2011, 11:37:04 AM »

Offline Farzooq

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Re: PSO -- Pakistan State Oil
« Reply #660 on: November 24, 2011, 11:43:18 AM »
Pakistan OMCs - Volumes up by 4% YoY


•Provisional Oil Marketing Companies data (3-major product categories) for 4mo FY11 depicted an overall industry growth of 4%YoY to 6,204K MT from 5,991K MT in the comparable period last year.
 
•PSO’s overall marketshare in HSD+MOGAS+FO sales declined by 3pps to 65% in 4mo FY12, while APL’s share in the pie inched up to 8% from 6% last year. Shell’s share also fell by 4pps to 9% due to lower FO sales in the period under review.
 
•OMC margins on HSD and MOGAS, which were fixed in PKR terms at PKR 1.35 per litre and PKR 1.50 per litre respectively were increased to promised levels of PKR 1.75 and PKR 1.98 per litre in three phases in 4mo FY12, which bode well for IGI OMC Universe.
 
•We maintain a positive outlook on the sector, on the back of both volumetric growth and higher margins. APL could stand out in terms of earnings growth in FY12, as the company’s earnings are anticipated to be fuelled by both higher volumetric offtake and higher margins.
 
•PSO’s FY11 steller earnings at PKR 86.17 per share, which were largely due to a lower effective tax rate (17.7%) and healthy inventory gains to the tune of PKR 3.8bn, are unlikely to be repeated in FY12. PSO’s receivables have inched up to PKR 179.5bn, and in the event that MoF does not release immediate payment to the state owned OMC, marketshare could be further eroded during Nov-Dec11.
 
IGI Research
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Offline Farzooq

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Re: PSO -- Pakistan State Oil
« Reply #661 on: November 25, 2011, 10:27:18 PM »
PSO warns to cut fuel supply as dues cripple its liquidity


 APP
(41 minutes ago) Today



The piled up huge receivables of Rs 179 billion by the power sector and the national carrier may lead to a breakdown in supply chain. – File Photo by AFP


 

KARACHI: Pakistan State Oil (PSO) warned on Friday to stop fuel supply to defaulting customers until outstanding receivables are recovered.

According to a statement, the huge outstanding, caused by non-payments from the power sector and airline, has maimed company’s liquidity position.

The piled up huge receivables of Rs 179 billion have crippled company’s liquidity position which may lead to an inevitable breakdown in the supply chain resulting in fuel shortage in the country.

Despite repeated non-payments from power sector, PSO has somehow managed to supply fuel worth an average of Rs 32 billion to the power entities on a monthly basis.

The power sector entities namely Hubco, Wapda and Kapco have continuously defaulted on their payment obligations to PSO. An average shortfall of Rs 10 billion per month has been recorded in payments from the power sector for the past 6 months, with just Rs 5.2 billion being disbursed to PSO in the month of November.

PSO said that a similar situation is occurring with the continuous default by PIA. The national carrier has been violating its agreement with PSO by failing to make regular payments for the fuel it receives.

Keeping in view the national interest, PSO had supported PIA in every possible way including borrowing from banks and accommodating PIA’s requests for deferred payments in order to ensure uninterrupted fuel supply to the airline.

As of today, PIA owes PSO Rs 4.3 billion, while their payments have become irregular and the carrier has increased its daily average fuel upliftment from Rs 60 to Rs 70 million worth of product.

The national carrier had promised to pay back Rs 1 billion of its outstanding bills by the end of October, however, they not only violated this commitment, but they have recently stopped their daily fuel payments to PSO as well.

The situation has now reached a critical level and the continuous non-payment by these entities has left PSO cash-strapped and unable to meet its payment obligations to both local and international suppliers.

If immediate payments are not received from the defaulting entities, be it power sector or the national carrier, the import of future fuel cargoes will have to be deferred as the company has exhausted its financing resources.

With domestic production of fuel oil already in doldrums, any reduction in import would result in fuel shortages, increased load shedding and disruption of flight schedules nation wide, PSO said.

Faced with this situation PSO will be left with no choice but to discontinue supplies to any defaulting customer until its outstanding receivables are recovered.
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Offline Farzooq

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Re: PSO -- Pakistan State Oil
« Reply #662 on: November 29, 2011, 12:58:38 PM »
PSO receivables rise to Rs180bn
Pakistan State Oil (PSO) in a statement released on Monday
has stated that its receivables have risen to Rs180bn due to
non-payments from the power sector. On the other hand,
PSO payables stand at Rs162bn, which includes Rs84bn of
LC payments to Kuwait Petroleum Company (KPC).
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Offline AGz

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Re: PSO -- Pakistan State Oil
« Reply #663 on: November 29, 2011, 01:01:03 PM »
PSO receivables rise to Rs180bn
Pakistan State Oil (PSO) in a statement released on Monday
has stated that its receivables have risen to Rs180bn due to
non-payments from the power sector. On the other hand,
PSO payables stand at Rs162bn, which includes Rs84bn of
LC payments to Kuwait Petroleum Company (KPC).

Source?
Aurangzeb A. Durrani
MSManiar Financials (Pvt.) Ltd.

Offline Farzooq

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Re: PSO -- Pakistan State Oil
« Reply #664 on: November 29, 2011, 01:02:24 PM »
PSO receivables rise to Rs180bn
Pakistan State Oil (PSO) in a statement released on Monday
has stated that its receivables have risen to Rs180bn due to
non-payments from the power sector. On the other hand,
PSO payables stand at Rs162bn, which includes Rs84bn of
LC payments to Kuwait Petroleum Company (KPC).

Source?

http://www.thenews.com.pk/TodaysPrintDetail.aspx?ID=79813&Cat=3
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Offline Farzooq

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Re: PSO -- Pakistan State Oil
« Reply #665 on: December 03, 2011, 09:36:26 AM »

Power sector pays PSO Rs 13 billion out of Rs 160 billion dues

 December 03, 2011
ABDUL RASHEED AZAD
 The power sector paid Rs 13 billion out of Rs 160 billion to Pakistan State Oil (PSO), but its local and international liabilities increased by Rs 12 billion in a week.

According to official documents available with Business Recorder on December 2, the receivables of PSO have swelled to Rs 168.2 billion and payables to Rs 160.63 billion.


On November 25 PSO's local and international liabilities were Rs 148.27 billion, which on December 2 swelled to Rs 160.63 billion.

The company's receivables from power sector have reduced by Rs 13 billion in a week as on November 15 its outstanding dues against power sector touched Rs 160 billion mark.

The Water and Power Development Authority (Wapda) paid Rs 1.84 billion to PSO, Hub Power Company paid Rs 3.38 billion, and Kot Addu Power Company paid Rs 7.74 billion.

Present PSO receivables include Rs 35.7 billion from Wapda, Rs 73.4 billion from Hubco, Rs 33.4 billion from Kapco, Rs 3.45 billion from PIA, Rs 236 million from OGDC, Rs 4.66 billion from KESC and Rs 1.05 billion from Pakistan Railways.

PSO is to receive Rs 1.4 billion on account of audited price differential claim of high speed diesel (HSD), Rs 3.4 billion on account of price differential on low sulphur fuel oil & high sulphur fuel oil (LSFO/HSFO), Rs 1.36 billion on account of price differential on imported PMG and Rs 8.6 billion price differential under GLMP.

The power sector is the main defaulter of the PSO at Rs 147 billion.

PSO's payables to local refineries have crossed Rs 78 billions mark.

It owes Rs 35.6 billion to Parco, Rs 10.48 billion to PRL, Rs 9.14 billion to NRL, Rs 19.7 billion to ARL, Rs 2.3 billion to Bosicor, and Rs 0.788 billion to others.

LC dues of Kuwait Petroleum Company (KPC) and other international fuel supplying companies swelled by Rs 11.6 billion within a week, which on November 25 stood at Rs 71.015 billion now have reached Rs 82.6 billion.

The PSO is supplying on average Rs 32 billion worth of fuel to the power sector monthly, which persistently defaults on its payment obligations to PSO.

An official of the company said that PSO has now reached a critical level.

The continuous non-payment by public sector entities has left PSO cash-strapped and unable to meet its payment obligations to both local and international suppliers.

"In case immediate payments are not received by the defaulting entities, be it power sector or the national carrier, import of future fuel cargoes will have to be deferred as the company has exhausted its financial resources.

With domestic production of fuel oil already in doldrums, any reduction in import would result in fuel shortages, increased load shedding and disruption of flight schedule nation-wide.

Faced with this situation, PSO will be left with no choice but to discontinue supplies to any defaulting customer until its outstanding receivables are recovered" the official added.
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Offline Farzooq

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Re: PSO -- Pakistan State Oil
« Reply #666 on: December 09, 2011, 09:54:27 AM »


NA body asks govt to release Rs80b immediately to keep PSO afloat

STAFF REPORT 11 hrs ago | Comments (0)

 ISLAMABAD - National Assembly Standing Committee asked government to take immediate measures to resolve issue of circular debt of the Pakistan State Oil (PSO) and help it in recovery of Rs80 billion outstanding dues to keep the company afloat. This direction was given by the committee in its meeting held in Karachi. Committee was chaired by Sardar Talib Hassan Nakai, says a press release of National Assembly Secretariat. Committee expressed grave concern over circular debt and feared that if the issue was not resolved the state owned strategic company would meet with disaster and in turn spreading chaos and confusion among the public.

 MD PSO informed the committee that circular debt problem was resulting due to delay in payments by power sector. However, PSO was bound to make continuous supplies to power sector in national interest to avoid power crises. PSO demanded immediate release of Rs80 billon to keep the company afloat. Committee also constituted a sub-committee under convener-ship of Chaudhary Muhammad Barjees Tahir to examine the inquiry report and help PSO to recover the amount from management of Zaqsoft Technologies on which a penalty was imposed because of supplying low-priced computer accessories to PSO at exorbitant rates. The sub-committee would also examine cases of recruitment made in PSO since 2001 to till date. The meeting was attended by Nawab Ali Wasan , Mian Abdul Haq alias Mian Mitha, Nawab Muhammad Yusuf Talpur, Syed Anayat Ali Shah, Ch. Asghar Ali Jatt, Sheikh Aftab Ahmed, Ch. Muhammad Barjees Tahir, Abdul Waseem, Syed Haider Ali Shah and Muhammad Usman Advocate and by senior officers of ministry of petroleum and PSO.
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Offline Farzooq

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Re: PSO -- Pakistan State Oil
« Reply #667 on: December 10, 2011, 11:56:23 AM »

PSO receivables rise to Rs173bn

 Saturday, 10 December 2011 09:30
ABDUL RASHEED AZAD
 
ISLAMABAD: The Pakistan State Oil (PSO) paid about Rs 5 billion to Kuwait Petroleum Company (KPC) in the past two days, while its receivables against power sector and other local clients rose to Rs 173 billion, sources told Business Recorder.

They said tat PSO's longstanding circular debt again rose to around Rs173 billion, leading to severe liquidity constraint that is likely to compromise its ability to pay for critical fuel imports.

PSO's payables to local oil refineries stand at Rs 79.72 billion at present and payables to international oil supplier KPC stand at Rs 81.75 billion. On December 7 its payables to KPC and other international oil suppliers amounted to Rs 86.7 billion, which on December 9 declined to Rs 81.7 billion.

Sources said that PSO's total payables to refineries and international fuel suppliers on Dec 9 reached Rs 161.48 billion from Rs 164.7 billion of December 7.

"During last two days PSO paid about Rs 5 billion to KPC on account of letters of credit. Serious problem caused by non-payment from power sector and PIA has crippled PSO's position and may lead to inevitable breakdown in the supply chain, resulting in fuel shortages in the country", they added.

They said that PSO has requested the government for immediate release of Rs 80 billion to keep the company afloat, otherwise serious power crisis would erupt in the country yet again.

According to one PSO official, the company continues to face serious financial problems and periodic small bailout packages extended by the government were only sufficient to meet the very short-term liquidity needs of the entity. This situation, they said, continues since 2008. The national fuel supply company's receivables from power sector have now reached Rs 151.84 billion.
 
At present PSO receivables include Rs 36.6 billion from Wapda, Rs 76.7 billion from Hubco, Rs 33.99 billion from Kapco, Rs 3.65 billion from PIA, Rs 181 million from OGDC, Rs 4.66 billion from KESC, and Rs 1.085 billion from Pakistan Railways.  The company is to receive Rs 1.4 billion on account of audited price differential claim of high speed diesel (HSD), Rs 3.4 billion on account of price differential on low sulphur fuel oil & high sulphur fuel oil (LSFO/HSFO), Rs 1.36 billion on account of price differential on imported PMG and Rs 8.6 billion price differential under GLMP.

PSO's payables to refineries have reached Rs 79.7 billion. The payables to refineries include Rs 36.4 billion to Parco, Rs 11.38 billion to PRL, Rs 9.2 billion to NRL, Rs 19.8 billion to ARL, Rs 2.3 billion to Bosicor, and Rs 633 million to others.
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Offline Valueestimator

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Re: PSO -- Pakistan State Oil
« Reply #668 on: December 11, 2011, 10:17:03 PM »
Pso to benefit the most

any one knows how issuance of PIB works to ease circular debt problem.

« Last Edit: December 11, 2011, 10:51:18 PM by Farzooq »
MLCF, FECTC, KTML, FASM, JDMT, REWM, BCML, NMFL, QUICE, OTSU

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Re: PSO -- Pakistan State Oil
« Reply #669 on: December 11, 2011, 10:46:35 PM »
Pso to benefit the most

any one knows how issuance of PIB works to ease circular debt problem.

PIB means investment bonds, which doesn't carry the payment of principle amount time to time. The principle amount is paid at the end of the investment period i.e. maturity. The markup/interest is paid semi-annually. Hence, the companies which owes money to banks will not be required to make debt payments as of yet. This will save them from worsening their liquidity crunch.

Also the banks will move them from accounts receivable or borrower side to investment. This will keep the advances vs deposit ratio low. Good for all but having said that you know that at one time the payment is to be made by companies. So if they improve their cash base then its a healthy and fruitful sign of this facility. I hope I have made it clear to you  :s1:
« Last Edit: December 11, 2011, 10:50:54 PM by Farzooq »
Aurangzeb A. Durrani
MSManiar Financials (Pvt.) Ltd.

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Re: PSO -- Pakistan State Oil
« Reply #670 on: December 11, 2011, 11:13:43 PM »
Appreciate your response on this. Could you please elaborate with some example e.g. receiables of pso, they have with hubco etc,
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Re: PSO -- Pakistan State Oil
« Reply #671 on: December 12, 2011, 09:43:19 AM »
Appreciate your response on this. Could you please elaborate with some example e.g. receiables of pso, they have with hubco etc,

Well if we take your example we can elaborate it like this. Hubco owes money to PSO, right? Now it will need some money to make the payment to supplier for continuous fuel supply otherwise Hubco won't be able to produce electricity. Hubco has already taken a big amount of loan or financing facility. So, now in order to make payment it would require Hubco to get more loan from banks but due to non-payment to banks against loans it would be very difficult to get that extra amount of loan.

Because of PIB's the banks that used to have Hubco in its borrowers list and being at default due to non-payments, is now transferred to investment portion. Hence the loan is converted into statement, wiping off Hubco from lending side. Hence, now Hubco can take more cash from banks as it's loan is now cleared and it has refreshed financing available. Similar, will be for PSO and banks or any other company and banks.

Good enough?
Aurangzeb A. Durrani
MSManiar Financials (Pvt.) Ltd.

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Re: PSO -- Pakistan State Oil
« Reply #672 on: December 12, 2011, 11:24:15 AM »
Thanks for the clarification.
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Re: PSO -- Pakistan State Oil
« Reply #673 on: December 13, 2011, 10:03:06 AM »
Thanks for the clarification.

Mention not! That is the basic purpose pf this forum.  ;)
Aurangzeb A. Durrani
MSManiar Financials (Pvt.) Ltd.

Offline Farzooq

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Re: PSO -- Pakistan State Oil
« Reply #674 on: December 19, 2011, 11:55:56 AM »
PSO regained the lost ground
November has proved to be a productive month for PSO with big improvement in market share
in diesel (up 400bps to 55%) and gasoline (up 200bps to 49%). PSO sales are still underperforming
the industry in 5M with only 2% growth.

Key drivers of 2Q earnings still intact
We see at least three drivers of sequential growth in OMCs earnings (1) 30?32% margin jump on
regulated HSD and MS as part of agreement with the govt. and firm margin in deregulated
segment, (2) 7?9% volume growth and (3) inventory gains. Recent volatility in exchange rate will
remain a key wild card. While Pak Rupee has depreciated by 4% since early Nov, the
incremental impact for OMCs would be only 2%. We estimate PRs2?2.5bn impact on PSO (PRs8?
10/sh). Despite heavy FX losses, we still believe PSO’s 2Q EPS may remain in double digit.


kasb
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Re: PSO -- Pakistan State Oil
« Reply #675 on: December 19, 2011, 01:16:43 PM »
farzooq bhai what would be net impact on the eps of pso i.e exchange loss and inventory gain ...?

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Re: PSO -- Pakistan State Oil
« Reply #676 on: December 19, 2011, 01:17:02 PM »
and is it buy here ...?

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Re: PSO -- Pakistan State Oil
« Reply #677 on: December 24, 2011, 01:09:51 PM »

PSO receivables surge to Rs185.52bn

 Saturday, 24 December 2011 12:19
RECORDER REPORT
 
ISLAMABAD: The total of receivables and payables of Pakistan State Oil (PSO) has swelled to over Rs 358.45 billions, out of which Rs 185.52 billion are receivables and Rs 172.93 billion payables.
 
According to official documents, PSO receivables from power sector increased by Rs 5.3 billion in a week. Similarly, its payables to local fuel supplying companies and international fuel supplying companies also soared by Rs 8.22 billion.

The power sector is the leading debtor of PSO with Rs 164.633 billion outstanding against it.

Hub Power (Hubco) is the leading defaulter of PSO with Rs 83.3 billion, followed by Wapda Rs 40.17 billion, Kapco Rs 36.642 billion, KESC Rs 4.548 billion, PIA Rs 3.254 billion, Pakistan Railways Rs 1.134 billion and OGDC Rs 257 million.

Currently, NLC has also entered the list of PSO's defaulters' list with Rs 351 million.

Within a week PSO's outstanding dues against Wapda increased by Rs 1 billion, against Hubco by Rs 3.3 billion and against Kapco by Rs 1 billion.
 
A PSO official told Business Recorder that previously the company was supplying on average Rs 32 billion worth of fuel to the power sector per month, but now it has reduced supply to Rs 16 billion per month due to continuous defaults by the power sector.

The PSO is to receive Rs 1.4 billion on account of audited price differential claim of HSD, Rs 3.4 billion on account of price differential on low sulphur fuel oil & high sulphur fuel oil (LSFO/HSFO), Rs 1.36 billion on account of price differential on imported PMG and Rs 8.6 billion price differential under GLMP. It has also to receive Rs 1.15 billion from PIA on account of financial charges.

PSO's payables to local refineries crossed Rs 84.1 billion. The payables to local refineries include Rs 39.38 billion to Pak-Arab Refinery, Rs 12.084 billion to Pakistan Refinery, Rs 9.37 billion to National Refinery, Rs 20.17 billion to Attock Oil Refinery, Rs 2.3 billion to Bosicor and Rs 775 million to others.

PSO's LC payments to Kuwait Petroleum Company (KPC) and other international fuel supplying companies have swelled to Rs 89 billion.
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Offline Farzooq

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Re: PSO -- Pakistan State Oil
« Reply #678 on: December 27, 2011, 01:48:40 PM »
PSO receivables increase to Rs 180 billion
financial valuations of PSO is futile…
Pakistan’s biggest petroleum handler, Pakistan State Oil (PSO) is on the verge of
financial collapse since its outstanding dues from various ‘energy sector’ entities has
reached to the extent of Rs 180bn (which is highest in 4?years). It seems that no bailing
out is forth coming from ministry of finance (MoF). Actual cash flows of the entity have
gone negative due to incidence of more short term loans to keep the daily operations
afloat. It is imperative that the calculation of DCF value of such an entity may be a
futile exercise and thus tantamount to mislead investors.

Liabilities swelling…
When PSO is not receiving due payments, it is hard for their treasury to arrange
payments for refineries. Right now PSO has to pay Rs172bn of many companies that
also include international principals thus painting a negative image outside.
PSOs’ total payables to local refineries have reached Rs 75bn of which it has to pay Rs
35.7 to unlisted Pak?Arab Refinery Limited (PARCO),Rs 10 bn to Pakistan Refinery
Limited (PRL), Rs 8bn to National Refinary Limited (NRL) , Rs 18 billion to Attock
Refinery (ATRL), Rs 2 bn BYCO petroleum etc.

List of defaulters
The power sector is a major defaulter of PSO, which owes Rs 153bn such as poorly
managed state run WAPDA that owes Rs 39bn and independent power producers such
as HUBCO that owes Rs 79bn & KAPCO that owes Rs 35bn. Public utility KESC also owes
4.55bn. Among all these companies that owe, it is WAPDA which is responsible for this
awful crisis since it is the main culprit behind whole crisis. Had WAPDA being managed
properly and paid to power entities, this crisis of huge proportions could not have
happened.
Some of the other receivables include Rs 1.3bn over price differential claim (PDC) on
HSD & Rs 3bn on HSFO.

Some likely repercussions…
We see this receivable to be ballooned since government is entangled in multiple crises
ranging from fiscal constraints to political fallout. It is imperative that investors should
see real worth of such companies that used to be cash rich till 2007?8 but since trapped
into vicious cycle of ‘circular debt’. The non resolution of issues means that investors
should wait while making an entry into the script. Couple of months back there was
some resolution coming wherein banks were about to bailout energy companies from
this ‘circular debt’; however, no solution is inside.
Here we prefer Attock Petroleum (APL), a small Attock Group oil handler, over PSO.
Wherein we consider SHEL as a weak business model owing to their exposure in
depleting CNG business.

scstrade
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