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The government of Pakistan is considering issuing sukuk worth Rs 200 billion to clear circular debt, senior government officials said. This was stated by Sajad Mahmood Qazi, Joint Secretary Ministry of Energy, Petroleum Division, and Yaqoob Suttar, Deputy Managing Director (DMD) Pakistan State Oil (PSO), while briefing a subcommittee of the Public Accounts Committee (PAC) held here on Thursday under the chairmanship of Senator Sherry Rehman. The officials said that the concerned ministries are currently negotiating with a consortium of Islamic banks operating in the country to raise debt worth Rs 200 billion from Islamic banks in a bid to pay off dues of energy firms on account of circular debt.
According to officials, the consortium of Islamic banks has asked the government to provide sovereign guarantee, but the Ministry of Finance as yet is reluctant to give them such a guarantee. Officials further said that earlier, the ministry floated the first Pakistan Energy Sukuk valuing at Rs 200 billion in March 2019 of which Rs 60 billion was provided to PSO. They said that the PSO is facing serious financial issues as the public sector power producers GENCOS or the Ministry of Finance are/is not timely clearing dues.
The panel asked the officials to provide a detailed briefing to the PAC on the matters pertaining to Petroleum Division and attached departments. The officials of Ministry of Finance and Ministry of Energy, Power Division, were further directed to come forward with a viable plan to settle the matter of circular debt.
The PSO officials sated that they are operating through borrowing from commercial banks and the company is able to get loans only because it has a strong financial position which has become possible through strong sales. They said that PSO is selling oil products worth Rs 4 billion on daily basis across the country. Moreover, the company has also started liquefied natural gas (LNG) supply but unfortunately the company's liquidity position has also come under serious pressure as receivables on account of LNG sales against Power Division are also mounting and reached the Rs 100 billion mark. The DMD Finance PSO said that the government should use innovative financial solutions to address the issue of circular debt, adding the company has paid Rs 58 billion to various banks on account of interest.
The panel was informed that Sui Northern Gas Pipelines Limited Company (SNGPLC) has to pay Rs 65 billion to PSO on account of LNG supplies. The committee was further informed by the Petroleum Division that outstanding dues against GENCO-III unit of Water and Power Development Authority (WAPDA) have reached Rs 59 billion mark from Rs 13.3 billion as the GENCO kept on delaying the repayments to PSO.
DMD SNGPL Amir Tufail briefing the panel on the subject of non-recovery of Rs 42 billion outstanding against defaulters said that the company has recovered Rs 22 billion from main industrial defaulters. He further said that the company is also taking all necessary steps to recover the staled amount against commercial, special domestic and domestic gas consumers. He said that due to court cases, significant receivable amounts of the company are stuck.
Briefing the panel on the issue of the arrest of general manager SNGPL Multan, who, according to Amir Tufail, was later put behind bars following his daring drive against gas thieves as he purportedly caught "red-handed" an influential factory owner and imposed a Rs 22 million penalty on him, Amir Tufail said that the official is still in jail.
He said that the GM caught a factory owner red-handed involved in gas theft over the years and imposed heavy fine on him. He added that the factory owner has so far paid 50 percent of the fine to the SNGPL. He claimed that after the incident, the factory owner lodged a first information report (FIR) against the SGNPL official, claiming that the official took bribe of millions of rupees from a Multan-based industrialist.
The joint secretary Ministry of Energy, Petroleum Division, said that to settle the issue of Rs 417 billion outstanding amount of Gas Infrastructure Development Cess against different consumers, the government on August 27 promulgated an ordinance through which a proposal to waive off Rs 208.5 billion has been offered to the defaulters of the GIDC. He added that Rs 16 billion on account of GIDC are outstanding against industrial consumers.

Copyright Business Recorder, 2019

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