MABAD - The cash-strapped Pakistan State Oil (PSO) management is seriously contemplating to encash the performance bond of M/S FAL Oil, which reportedly remained failed so far to sell cargoes of fuel oil to the company, TheNation learnt.
M/S FAL Oil has caused a huge loss to the national exchequer and PSOs losses due to FAL non-performance of their contractual obligations has led to a loss of over $30 million, sources said adding that M/S FAL Oil contracted to sell PSO cargoes of fuel oil during Nov-Dec. 2010 and to date have not fulfilled their contractual obligations.
According to PSOs own tender if a supplier is over six days late in delivering the cargo they can cancel the cargo and encash their performance bond, however, M/S FAL Oil is five months late the performance bond of M/S FAL oil has not been encashed worth $7.8 million they said adding that the amount of the performance bond held by PSO is expiring on March 31st, 2011.
Sources further informed that PSO wrote a letter to the Standard Chartered Bank in Karachi to en-cash M/S FAL Oils performance bond in March around the 18th of the month and then all of a sudden asked the bank not to do so. They also told that the Managing Director of PSO received a call from the government big wig warning him serious consequences for the PSO management if performance bond was encashed. They further added that MD PSO succumbed to the pressure and informed the Managing Committee of PSO which had approved the encashment of the performance bond that PSO would no longer go ahead with encashment.
It is not out of place to mention that M/S FAL Oils representatives are coming to Pakistan to negotiate with PSO as the performance bond is only valid till 31st March and FAL is just going to delay things to ensure PSO doesnt encash the bond.
The Supreme Court we are sure would be quite interested to investigate matters like this and if PSOs management doesnt want to end up in hot water later on, should immediately encash the performance bond and send a claim for the remainder of their loss to M/S FAL Oil for payment and blacklist them from participating in any further tenders.
It is worthy to say that on the one hand we hear every day from PSO that they have no money due to the circular debt and they stop the supply of fuel oil to the various power plants and hold back payments to refineries but on the other hand we see PSO completely flaunting their import tender rules and favouring the influential one business tycoon who had deep relations in the government.
The Nation contacted PSO management to get their stance on the said issue; however nobody was available to comment.