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ISLAMABAD: The Petroleum Division has devised a strategy for curtailing Rs1.7 trillion petroleum sector circular debt to Rs600 billion by the end of fiscal year 2022-23.

Secretary Petroleum Division Captain Muhammad Mahmood (retd) revealed this in a meeting of the Public Accounts Committee (PAC) on Wednesday.

Under the chairmanship of Noor Alam Khan, the committee examined the Audit Report of the Petroleum Division for 2021-22.

PAC examines audit reports of petroleum division for 2019-20

Responding to an audit para related to the non-settlement of petroleum sector circular debt, the secretary said that the present government has planned a significant reduction in the circular debt by the end of the current fiscal year which reached to Rs1.7 trillion in December 2022. He briefed the members’ committee about the government’s strategy for the petroleum sector circular debt retirement.

He said Finance Minister Ishaq Dar tasked the Auditor General of Pakistan (AGP) to verify the gas circular debt claims of gas companies - Sui Northern Gas Pipeline Limited (SNGPL) and Sui Southern Gas Company (SSGC) on the subject of gas development surcharge (GDS) which would help the settlement of Rs700 billion of receivables.

A proposal has been under consideration by the federal cabinet for the swap agreement of the power sector and the Pakistan State Oil (PSO) of Rs300-400 billion.

The secretary said, “A proposal for transaction was meant to settle PSO’s claims of receivables against Nandipur Power Plant (NPP) and Guddu Power Plant (GPP)”.

He further explained that revised in protected and non-protected gas tariff with effect from January 2023 would help to generate Rs250 billion from domestic consumers besides abolishing the subsidy for the fertilizer sector.

“We can’t introduce a uniform gas tariff for the fertilizer sector based on efficiency of plants, agreement period, and cost of gas supply; however, raised gas from Rs302 per mmbtu to Rs510 per mmbtu for some and others’ gas tariff increased up to Rs1,759 per mmbtu”, he said.

Responding to a question regarding 0.30 cent per mmbtu gas supply to Engro Company’s fertiliser plant, he said the matter was sub-judice in the court.

Chairman Noor Alam expressed his utter displeasure over excluding the names of owners of M/s Byco and M/s Hascol from the ECL. He directed the Ministry of Interior and the FIA to put again the owners of both companies at the ECL list and confiscate their properties in the country.

Earlier, the secretary informed the members that M/s Byco is still operative in the country and doing business as usual despite Rs57 billion receivables.

The chairman committee recommended the cabinet to lift the moratorium on new gas connections and gas consumers would charge full monthly sale price instead of adjusting the bill for winter and summer seasons.

Version from Cnergyico (formerly BYCO)

“This is a simple matter of payables versus receivables since different government entities owe Cnergyico to the tune of Rs79 billion,” said a spokesperson for Cnergyico (formerly BYCO).

“The matter is in court and is subjudice and as per the honorable court’s directives, the government has been restrained from any adverse action (s) against the company.

“The company has held numerous meetings and even shared payment plans in the near past with the government and currently in talks with them for any settlement,” the statement added.

The article, originally published May 18, was updated on May 21 to incorporate Cnergyico spokesperson’s statement

Copyright Business Recorder, 2023


Comments are closed.

Tulukan Mairandi May 18, 2023 10:55am
It will be a plan. Or a pipe dream. In reality circular debt will only swell to PKR2.4 billion by end of the year.
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Adal May 19, 2023 09:37am
@Tulukan Mairandi, it's 1.7 trillion now. Increase in meter rent from 50 to 500 should be used to service the circular debt strictly.
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