Pakistan Railways mulling PSO contract suspension; opting for Parco fuel supply

KARACHI: Pakistan Railways (PR) is considering the suspension of its contract with the Pakistan State Oil (PSO) and is reported to be in the process of signing a fuel contract with the Pak Arab Refinery Company (Parco), an official said on Monday.

A spokesperson for the PSO said the company has been fuelling the national economy for the last 45 years, and has been catering to the requirements of the petroleum products of Pakistan Railways for more than three decades, as both the organisations share the common goal of national progress and growth.

In addition, the Pakistan State Oil is the only oil marketing company that uses Pakistan Railways for fuel transportation, as well, since no other oil marketing company (OMC) has the capability, or willingness, to do that.
“PSO had always supported PR, both operationally and financially, in normal circumstances and in all national emergencies, at times at the cost of the company’s other commitments.”

Most recently during the ongoing Covid period, the Pakistan State Oil continued to supply Railways over and above its contractual obligations, despite multiple payment defaults and delays.

The company also doubled the credit limit extended to the Pakistan Railways to Rs3 billion during this difficult time and getting such news of suspension of the contract is; therefore, disappointing.

The spokesperson said both the organisations have commercial and contractual obligations, which can be reconsidered, if required.

With regard to tax matters, the PSO representatives made it clear that all deductions that the company made were in full compliance to, and in accordance with, the relevant federal and provincial tax laws.

PSO has continued to maintain that the Railways can get the required tax exemptions from the relevant authorities so that PSO can act accordingly.

It also noted that it was encouraging that the Pakistan Railways was looking at measures to reduce the costs in their system, which would benefit the national exchequer.

“All [the] commercial organisations try to ensure that they are as cost efficient as possible. This applies to both PR and PSO, and both organisations have a right to review all elements of their business with a view to increasing their profitability,” he added.

“Since PSO is also a national organisation, it is equally obligated to review all our contracts and business relationships from time-to-time to ensure the best possible outcomes for PSO, and we will be conducting a similar critical review with regard to our multiple agreements with PR, as well,” the spokesperson added.

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