ISLAMABAD: Petroleum Division has sought Rs 27 billion from Finance Ministry to clear outstanding receivables of Kuwait Petroleum, well informed sources told Business Recorder.
Sharing the details, sources said that Economic Coordination Committee (ECC) of the Cabinet considered in its meeting held on December 21, 2022, a summary submitted by the Petroleum Division for a supplementary grant of Rs. 17 billion in respect of exchange losses incurred on the subject facility. ECC directed that a Committee of professionals/ along with their Terms of Reference (ToRs) be notified by the Petroleum Division.
According to sources, ToRS of the Committee included three types of facilities, i.e., KPC credit facility, FE-25 loan facilities and Islamic Trade Finance Corporation (ITFC) loans being availed by PSO for import financing purposes.
The Committee, while reviewing the matter in its meeting held on March 13, 2023, realized that report on mechanism for exchange loss on these facilities would take some time due to complexity of the issues and feedback required from some other important stakeholders. However, since an international default situation is developing on KPC credit facility payments, an immediate supplementary grant may be sought from the ECC. The Committee will; however, try to conclude the matter by end of March, 2023.
Credit facility for the last year expired on December 31, 2022; however, four transactions/ remittances are still due for which available funds will be short beyond 20 March 2023. NBP account has witnessed huge exchange losses owing to prevalent upheaval in the Rupee-Dollar parity during the last 12 months. As of March 10, 2023, NBP account has a balance of Rs. 14.3 billion, while these payments require about Rs 42 billion.
“There is definite possibility of international default unless an injection of Rs 27 billion is made before March 20, 2023,” the sources quoted Petroleum Division as saying in its proposal to be considered by the ECC, in its meeting scheduled to be held on Wednesday (today).
Foregoing in view, Petroleum Division has requested for an immediate supplementary grant of Rs 27 billion for transfer of funds to NBP account in order to avoid international default. NBP may also be directed to arrange payment on March 20, 2023 through bridge financing, if required.
Petroleum Division contends that Ministry of Finance is the only stakeholder in the instant case which may offer its comments in the ECC meeting owing to paucity of the time and severity of the issue.
Copyright Business Recorder, 2023