PSO’s foreign borrowing cost rises as rupee falls

State owed oil marketing company Pakistan state oil (PSO) has faces a loss of billions of rupees on foreign exchange borrowing in the wake of rupees sharped reduction against the dollar in the past around two years.

The company suffered a loss of Rs 9.7 billion on account of foreign exchange borrowing by June 30, 2018 the loss jumped to Rs30.2 billion by June 30, 2019 but it came down to Rs 28 billion by September 26,2019.

In September this year, PSO was to receive Rs 107 billion from the power sector compared to received of Rs 199.9 billion in June last year. However, circular debt in the liquefied natural gas (LNG) sector jumped due to delay in clearance of dues by sui Northern Gas pipelines Limited (SNGPL) on LNG supply.

PSOs receivables from SNGPL had been calculated at Rs15.9 billion in June last year, which went up to Rs 64.7 billion in June September, the receivables stood at Rs 626 billion.

Total receivables of PSO, including late payments surcharges, came in at Rs 335.3 billion in June last year and rose to Rs 346.9 billion in June this year. The receivables came down slightly to Rs 339.1 billion in September 2019 but many sectors still held back their payments.

Earlier, PSOs core business was oil supply but the previous Pakistan Muslim league Nawaz (PML-N) government diversified the company’s business and assign it the task of LNG import from Qatar under a long-term government to government deal.

However, this venture led to the emergence of circular debt in LNG sector as well. PSO’s LNG business in the first quarter of FY20 recorded loss of about Rs 800million because if increasing financial charges and taxes.

“PSO is a company with diverse business portfolio that offers a range of quality products to its customers. When looking at the company’s performance, PSO has earned after tax profit of Rs 3.5 billion, along with growth in its market shares, in Q1 of FY20”, a PSO spokesperson talked to media.

The spokesperson further said “the profit of Rs 3.5 billion ins a net of Rs833 million loss on LNG business, which is incurred due to a very this margin, high financial charges and heavy taxation levied on important prices rather than profit”.

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