MGCL seeks government help to recover dues from Pepco

Mari Gas Company Limited (MGCL) has sought the Ministry of Water and Power's assistance for recovery of dues amounting to billions of rupees from Pakistan Electric Power Company (Pepco), official sources told Business Recorder here on Tuesday. The alarming issue was discussed in detail at a meeting on March 11 convened by the Additional Secretary Ministry of Petroleum, Dr Zafar Iqbal. Shahid Sattar, Adviser Energy Ministry of Water and Power also attended the meeting.
The MGCL explained to the participants that, although Pepco is making small tranches of payments but the amounts paid are far less than the amount of the company's billing, as a result of which outstanding amount against Pepco had accumulated to Rs 3.217 billion as on March 11 and the same amount is payable to the Government of Pakistan (GoP) as Gas Development Surcharge (GDS).
In addition an amount of Rs 2.530 billion is receivable from Pepco on account of interest on late payment of gas sales invoices whereas Rs 1.175 billion is payable to the GoP on account of late payment surcharge. According to General Manager MGCL, the company is operating under a cost plus formula. It does not have any other resources to meet its operational and administrative costs, in case of non payment of its dues by any of its customers.
The company can only make timely payment of government dues including gas development surcharge, excise duty, GST and royalty etc. if the amounts are received from customers on time. "Ministry of Water and Power should help us and use its good offices for recovery of the company's dues from Pepco. Since the whole principal amount of Rs 3.217 billion receivable from Pepco is payable to GoP as GDS, this amount will be immediately deposited into the government treasury on receipt. Alternatively, the amount may be adjusted in the books by allowing MGCL to make necessary adjustments against payable to GoP," MGCL stated.
The issue of inter circular debt has become a headache for the government but it has no resources to resolve it immediately. Energy sector debt (fresh and previous) is about Rs 500 billion and there is no immediate plan to resolve this issue in the near future, commented an official of Water and Power Ministry on condition of anonymity.
The government has committed to the international financial institutions on a number occasions, that it will resolve this issue once and for all, but this commitment has not been honoured so far, he concluded.