Govt approves Rs9.32b payment to OMCs for decades-old claims

Following directives from govt on numerous occasions in past, OMCs supplied petroleum products to consumers at prices below regulated rates, leading to PDCs totaling Rs11b

ISLAMABAD   -   The federal government has finally allowed the clearance of up to about three decades old claims of OMCs paving the way for the payment of Rs9.327 billion outstanding dues. The Economic Coordination Committee of (ECC) of the cabinet has approved a summary of Petroleum Division for the payment of outstanding claims to OMCs, official documents available with The Nation reveals.

The claims primarily stem from price differential claims (PDCs), on the account of supply of various petroleum products covering the period from 1996 to 2011 by various OMCs including PSO, Total Parco (TPPL), Shell and Chevron, the documents reveals. According the minutes of the meeting, available with The Nation, pursuant to the directions of government on various occasions in past, the OMCs supplied petroleum products to consumers on a price lower than the regulated prices, which resulted in Price Differential Claims (PDCs) of OMCs amounting to Rs11 billion. The Petroleum Division had been taking up the matter of reimbursement of said PDCs to OMCs through budgetary allocation by Finance Division; however, the same could not be received due to budgetary constraint. For the FY 2023-24, Finance Division had allocated Rs9 billion against demand of Rs11 billion. PSO Price Differential Claim of LSFO-I (1996-2004, Rs3.407 billion): On direction of cabinet sub-committee on privatisation of Kot Addu Thermal Power Station (KAPS) of March, 1996, PSO supplied LSFO at lower rate to KAPCO during July 1996 to January 2004 which resulted in PDC of Rs3.407 billion. Finance Division after the audit had assured for its payment and made appropriate allocation in annual budget of FY 2009, however, could not pay the Rs3.407 billion due to budgetary constraints. Similarly, TPPL claimed a PDC on HSD of Rs38,190,000 covering the period from 2004-2008. During the period 2004-2008, government kept the increase in prices of petroleum products on hold to provide relief to the consumers, which resulted in PDCs of OMCs amounting to Rs290.214 billion. Finance through audit verified an amount of Rs287.683 billion for payment to OMCs in year 2011-12. However, an amount of Rs38.190 million pertaining to M/s TPPL was left and is still payable. PSO claim for PDC on account of HSFO (2009-2010, Rs3.909 billion): ECC in November, 2009 had approved supply of Furnace Oil by PSO to K E-lectric/ KESC during 2009-2010 with the direction that the differential of cost between fuel oil and gas will be picked up by the government for reimbursement to PSO. This resulted in PSO’s PDC of Rs5.709 billion. Out of total outstanding claim, an amount of Rs1.80 billion has already been paid by the Finance Division leaving an outstanding claim of Rs3.909 billion, which is still payable.

OMCs claim for PDC on Motor Gasoline of Rs1.974 billion covering the period from 2007-2011. OMCs including PSO, Shell, Chevron and Total PARCO (TPPL) imported Motor Gasoline pursuant in 2007 and sold at the regulated lower price which resulted in PDC. Out of total audited claim of Rs10.69 billion, an amount of Rs7.34 billion has already been paid to the respective OMCs, leaving an outstanding claim of Rs3.35 billion.

ECC in May, 2018 directed Petroleum Division to arrange the outstanding amount of Rs3.35 billion for making payment of PDC to respective OMCs. The matter was taken up with the Finance Division and subsequently pursued for budgetary allocation; however, the same did not materialise. The outstanding claims of Rs3.35 billion have been audited by Auditor General of Pakistan through a special audit report dated January 01, 2018 and cleared an amount of Rs1.974 billion for payment.

Out of the total OMCs claims of Rs9.327 billion, Rs9 billion have been allocated for its payment in the FY 2023-24. The ECC has approved the Supplementary Grant for remaining sum of Rs327.612 million in order to clear the long outstanding claims and relevant stakeholder’s circular debt during the FY 2023-24. The forum also discussed the inordinate delay in these payments pending since many years. It was considered whether any interest accrued on these outstanding payments and how the OMCs were showing these receivable in their own books. The Finance Division informed that most of the amount was already budgeted, however, veracity of the claims and due diligence were the duty of the Petroleum Division.

ePaper - Nawaiwaqt