PSO gets $100m grant to avert default

An emergent meeting of the Economic Coordination Committee (ECC) of the Cabinet on Tuesday approved a special grant of Rs27 billion (about $100 million) for payments to Kuwait Petroleum Corporation to avoid a formal default of the national fuel supplier — Pakistan State Oil (PSO). The meeting presided over by Finance Minister Ishaq Dar also sanctioned Rs2.9bn in additional supplementary grant and supply of 25,000 tonnes of wheat to Gilgit-Baltistan. The ECC had last week allowed a Rs50bn sovereign guarantee for commercial borrowing by Sui Northern Pipelines Ltd for partial payment of over Rs498bn payables to PSO. However, PSO issued a formal “SOS call” that a technical default had already occurred but required an emergent foreign exchange to avoid its repercussions. The KPC had been a long-term fuel supplier to PSO for decades through a credit facility which used to be extended on annual basis. The previous facility expired on Dec 31, 2022. Given the precarious position of the foreign exchange reserves, international suppliers were getting jittery while supplies needed to be ramped up.