The management of Pakistan State Oil (PSO) has decided to reduce fuel supply to Pakistan International Airline (PIA) by 10-15 percent, as the national flag-carrier has failed to pay Rs 4.3 billion outstanding dues of the company.

According to sources in PSO, the PIA management in August had made commitment to it that it would pay Rs 1 billion, out of Rs 4.3 billion, in October, but instead of clearing its outstanding, the PIA management has stopped daily payment to the fuel supplier.

An estimated Rs 50 million of jet fuel is being supplied to PIA by PSO on daily basis, sources said.  The fuel supplying company is facing severe financial crisis due to overdue payments against the power sector, PIA, OGDC and Pakistan Railways. Total circular debt of PSO has crossed Rs 325 billion a week ago.

PSO has to receive over Rs 180 billion from power sector and other local clients, while it has to pay over Rs 147 billion to its local and international fuel suppliers. Local fuel suppliers of the company included Pak Arab Refinery (Parco), Attock Oil Refinery (ARL), Pakistan Refinery (PRL) and Bosicor.

The PSO receivables include Rs 37.54 billion from Wapda, Rs 76.77 billion from the Hub Power Company (Hubco), Rs 41.27 billion from Kot Addu Power Company (Kapco), Rs 3.32 billion from Pakistan International Airline (PIA), Rs 305 million from Oil and Gas Development Company Limited (OGDC), Rs 1.8 billion from Karachi Electric Supply Company (KESC) and Rs 1.062 billion from Pakistan Railways.

At present, PSO's overdue amount has crossed Rs 141.78 billion.

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.  The power sector is the main defaulter of the PSO, which at present owes an aggregate amount of Rs 160.34 billion.