Karachi: Continuous cash flow problems due to a debt crisis in the energy sector has brought Pakistan`s only public sector oil marketing company Pakistan State Oil (PSO) close to bankruptcy, a report has said.
Pakistan State Oil Managing Director and Chief Executive Naeem Yahya Mir has warned that if the public oil company fails, its bankruptcy will not only shake the entire economy but also take down many banks.
"PSO is so interwoven into the economy of Pakistan that the effects of its bankruptcy will be felt in every part of the country, in both public and private sectors," Mir told the `Express Tribune` newspaper.
Financial analysts say that PSO fits into the category of corporate entities that seem too big to fail.
Mir’s fears are not baseless as the trillion-rupee giant has been facing continuous cash flow problems over the last few years, owing mainly to the burgeoning circular debt in the energy sector, the report said.
"The biggest problem of Pakistan’s energy sector is the circular debt, because of which our energy crisis has deteriorated. It has to be controlled," he said.
To finance its operations, PSO deals with many domestic banks. "I have taken their top executives into confidence, and asked them that they continue to support PSO because its financial health is very important for them too," Mir said.
"Owing to the size of our business dealings, which are always in the billions of rupees, our banks cannot afford PSO?s bankruptcy. If PSO sinks, it will take them with it, he stressed.
When I joined PSO, its receivables were hovering around Rs 250 billion. They have now come down to Rs 110 billion because of our pain-staking efforts over the past months, he claims.
The last post he held was that of technical adviser-international marketing at the Kuwait Petroleum Corporation.
I am a technical person, and only a technical person can fix technical problems in an oil company like PSO.