Several letters of credit (L/C) are due to be settled over the next few days by Pakistan State Oil (PSO).

But because the country's largest oil supplier is owed so much money by its customers, there are concerns that it may not be able to meet its payment obligations and may have to cancel orders for more fuel.

Fuel shortages

Pakistan will face a shortage of major petroleum products if PSO defaults on its international payments due to its severe liquidity crunch.

If PSO is unable to supply fuel, the country's power generation and road, rail and air transport sectors could all face problems supplying their customers.

L/Cs due

According to a PSO spokesman, L/Cs worth about 16 billion rupees (Rs16 billion) are due before 22 September.

Meanwhile, outstanding payments to foreign suppliers have accumulated to Rs30 billion.

Cancellations

To alleviate its credit crunch, PSO is considering cancelling oil imports worth around Rs19 billion.

The company is also pressing customers for payment.

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