Forex drain on account of freight.

Byline: CAPT. ANWAR SHAH

Pakistan State Oil (PSO) is Pakistan's largest oil marketing company both by value and by volume. PSO is the nationally State Owned Enterprise (SOE) responsible for the import, storage, distribution and sale of refined petroleum products in the country. By all measures, PSO is a massive entity, one of Pakistan's few companies with revenue streams in billions of US dollars. The size of these mind-boggling revenues makes sense when one analyzes the sheer scope of what PSO actually does. It has one of the largest (if not the largest) countrywide networks of petrol stations, providing fuel to low service delivery areas in the nooks and corners of the nation, selling fuel to power plants and airlines alike, with the corporation also being responsible for the import and sale of LNG to Pakistan's gas utility companies SSGC and SNGPL.

But with great power comes great responsibility and the debt PSO owes to this nation is equally colossal, more specifically the organization (as of 1st February 2023) has accumulated PKR 718 billion (USD 2.66 billion) in receivables and PKR 219 billion (USD 0.81 billion) in payables due to Pakistan's circular debt crisis.

To put things into perspective, PSO reported its highest-ever gross revenues of PKR 2.7 trillion for the year ended 30 June 2022 in its latest available annual report. The profit before taxes for the said period were PKR 147.8 billion. Suffice it to say that FY 2021-22 was a stellar year for PSO with some of the highest-ever returns.

The National Institute of Maritime Affairs (NIMA) has worked out that Pakistan spends approximately USD 6 - 8 billion annually as payment to foreign shipping companies for the carriage of approximately 100 million tons of cargo to and from Pakistan. A massive chunk of liquid imports of 18 to 21 million tons, representing around 70% of all liquid imports, is transported by foreign carriers of which PSO manages around half. Yet the company has staunchly remained in favor of importing petroleum products through foreign carriers shunning domestic carriage solutions.

Pakistan is currently in the midst of a full-blown economic crisis with the country's reserves plummeting to critical levels. The public debt is climbing to dangerously unsustainable levels nearing Pakistan's GDP. As per the State Bank of Pakistan, by September 2022, the Total Gross Public Debt for Pakistan was PKR 51,130.5 billion (USD 189 billion at present exchange rates) and we know...