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Saturday April 13, 2024

PM orders financial audit of state gas companies

Both the Sui firms are also using the costly RLNG in their system but failed to pay back to Pakistan State Oil

By Khalid Mustafa
March 23, 2024
An office of Sui Northern Gas Pipelines Limited (SNGPL) can be seen in this undated image. —SNGPL Website/File
An office of Sui Northern Gas Pipelines Limited (SNGPL) can be seen in this undated image. —SNGPL Website/File

ISLAMABAD: In a strategic move to handle the gas sector financial agencies, Prime Minister Shehbaz Sharif has directed the Energy Ministry to carry out a financial audit of the Sui gas companies, Sui Northern Gas Company Limited (SNGPL) and Sui Southern Gas Company (SSGC), which are getting gas supplies from public sector exploration and production (E&P) companies but are not paying back the money.

Both the Sui firms are also using the costly RLNG in their system but failed to pay back to Pakistan State Oil, putting the state-owned oil marketing company in a liquidity crisis.

“The prime minister wants the financial audit result within a month pinpointing reasons why the gas utilities are unable to pay back to E&P companies and PSO. The top mandarins of Petroleum Division have selected KPMG for complete financial audit of both Sui Northern and Sui Southern,” a senior official of the Energy Ministry told The News.

The KPMG will be given the task of looking into the Oil and Gas Regulatory Authority (Ogra) determinations on gas prices and their implementation. It would also probe revenue of gas companies and release of subsidies by the federal government to reduce the circular debt amid reports that the gas companies used to hold much of the subsidies with themselves and pass some amount to PSO, causing an increase in circular debt of the state-owned oil facility that has increased to Rs553 billion in the head of RLNG imports.

“KPMG will also look into the revenue increase of the gas companies particularly after the gas price increase by up to 193.3 percent effective from November 1, 2023 and up to 67 percent hike from February 1, 2024, and to what extent the gas utilities after the massive hike in gas prices have paid the dues of public sector E&P firms OGDCL, GHPL and PPL. The receivables of said E&P companies have alarmingly jacked up to Rs1.732 trillion which the gas companies need to pay.”

The financial audit would also help understand why the gas sector circular debt had jacked up to Rs2.9 trillion. Out of Rs2.9 trillion circular debt, Rs1 trillion had been added just because of no increase in gas prices in the last 10 years.

The gas sector circular debt has severely affected PSO’s ability to import LNG smoothly in the country and severely dented the exploration production activities of OGDCL, PPL and GHPL.

is expected to rise from Rs3.6 billion in FY22 to a staggering figure of Rs64 billion in FY24,” the management of PSO disclosed in its latest letter to the Petroleum Division.