ISLAMABAD: In a shocking development, the 100 percent state-owned company, Pakistan LNG Limited (PLL), has defaulted with the United Bank Limited (UBL) on LNG payments, putting the LNG supply chain in jeopardy.
This appalling situation, which has emerged because of non-payment of dues of Rs61.2 billion by Sui Northern, has exposed PLL to an imminent default on future LNG supply. This irritating development was identified in Pakistan LNG Limited’s (PLL) letter of February 4, 2021 to Special Secretary of Petroleum Division Nadeem Irshad Kiyani. It mentions that receivables of PLL from Sui Northern Gas Pipelines Limited have increased to a whopping Rs61.2 billion. And because of non-payment by Sui Northern, its economic miseries have increased to a new high because of which it defaulted with UBL on LNG payments on February 3, 2021.
The letter, whose copy is also available with The News, further says that if the default is not cleared, UBL will not establish LCs (Letter of Credits) for upcoming LNG cargoes. Narrating its financial meltdown, PLL highlighted the bitter fact that it hasn’t even paid custom duties (CD) for one LNG cargo, amounting to Rs800 million, with another payment of Rs4 billion payable to LNG suppliers on February 9, 2021. The company mired in miseries also sought intervention of the Petroleum Division for immediate release of Rs6.5 billion to avoid the potential disruption in the LNG supply chain. Similarly, the receivables of state-owned Pakistan State Oil, due to be paid by Sui Northern in the head of LNG supply, have also risen to a whopping Rs110.334 billion. This was disclosed in a daily payable and receivable position of PSO as of February 8, 2021.
This manifests that Sui Northern has defaulted with PLL and PSO on LNG payments, putting both the companies in hot water. The total receivables of PSO have increased to Rs338.568 billion. The power sector owes PSO Rs197.161 billion, Sui Northern Rs110.334 billion, and PIA Rs20.824 billion. The data about receivables and payables as of February 8, 2021 has exposed PSO to a liquidity crisis owing to which it is unable to pay Rs14.393 billion to refineries. And more importantly, PSO is still facing a hard time to clear dues of over Rs45 billion in the head of letter of credits for the Kuwait Petroleum Company (KPC) and Stand By Letter of Credit (SBLC) for LNG imports.
