In order to save Pakistan State Oil (PSO) from default, the Economic Coordination Committee (ECC) of the cabinet approved the clearance of the “outstanding payments accumulated during the tenure of the previous government and approved an amount of Rs30 billion as supplementary grant”.

A statement issued by Finance Division said that the decision was taken in a meeting, chaired by Finance Minister Miftah Ismail, at its office. The meeting was attended by Power Minister Khurram Dastgir Khan, MNA Shahid Khaqan Abbasi, State Minister for Petroleum Musadik Malik, Coordinator to PM on Economy Bilal Azhar Kayani, FBR chairman, OGRA chairman, federal secretaries and senior officers.

The Finance Division said that the Petroleum Division had “submitted a summary on SOS call for funds for PSO to meet international contractual payments during August1-14”.

The meeting was also told that there has been a decline in sales of HSD and MS for PSO by 28% and 32%, respectively.

The officials were also told of the increase in the procurement cost of petroleum products due to the devaluation of the rupee against the US dollar.

“For the smooth continuity of oil and gas national supply chain and avoid PSO from default on international payments, the ECC decided to clear the outstanding payments accumulated during the period of the previous government and approved an amount of Rs30 billion as a supplementary grant for PSO receivables,” said the statement.

The committee also directed the Power Division to “make immediate payments of the current outstanding amounts of Rs20 billion” by August 1, while the Rs12.8 billion have to be issued by August 4.

“The ECC also directed Finance Division and FBR to submit a proposal for generation of Rs30 billion through taxes, within a week,” said the statement.

The ECC also approved the Petroleum Division’s proposal to use the average exchange rate for the relevant period rather than the exchange rate of the last day for the current as well as future price determinations of petroleum products.

“The ECC also directed Petroleum Division to work out in consultation with OGRA other options of setting up petroleum product prices within a week. The ECC further directed Petroleum Division for submission of the proposal within a week to regulate the prices of Kerosene Oil and Light Diesel Oil after consultation with relevant stakeholders,” said the statement.