ISLAMABAD: Pakistan State Oil may default on payments due this month unless state-run companies at least partially pay for their oil, a spokeswoman said yesterday, putting energy supply at risk and threatening increased blackouts ahead of key elections.
The country’s largest energy company said last week it would be dramatically cutting back on the amount of oil companies can buy on credit, an action that would worsen already daily power cuts.
The power shortages have sparked violent protests and crippled key industries, costing hundreds of thousands of jobs in a country already beset by high unemployment, poverty and a Taliban insurgency.
Pakistan State Oil is owed $1.5bn, mostly by the government electricity companies but also by the state airline and railways. It owes suppliers $1.23bn.
Around two-thirds of Pakistan’s energy is generated by oil and gas. There are also widespread gas shortages.
Pakistan State Oil said it had received payments of $200m this month but needed another $250m within a week to pay its creditors.
“We have a liquidity crisis and we need funds urgently to keep the wheels going. In case — God forbid — we can’t pay the banks or our suppliers, it will be a problem for Pakistan,” spokeswoman Mariam Shah said. “We supply the airlines, we supply the defence forces, the government. If they start paying us on time, this kind of crisis would never ever emerge.”
The power cuts typically become far worse in the sweltering summer months when fans and air conditioners are turned on full.
Elections are expected to be held in late spring and the dismal performance of the state-run power sector has been a repeated complaint from voters.
Reuters
