Ministry of Petroleum (MoP) has warned the Finance Ministry that Oil and Gas Development Company Limited (OGDCL) may not be able to ensure regular supply of crude oil and natural gas unless it receives the entire payment due from refineries and gas distribution companies.
"The situation of rising circular debt has severely affected OGDCL liquidity position and consequently OGDCL is finding it very difficult to carry out its business plan..." says Secretary Petroleum Imtiaz Qazi in a letter sent to Finance Secretary Dr Waqar Masood on April 14.
Secretary Petroleum further warned that circular debt issue would delay the execution of OGDCL development projects. "It would be pertinent to mention that the delays in execution of OGDCL development projects of national importance would have repercussions on the overall economic conditions of the country with respect to meeting its energy demands in the long run," he said.
Due to the prevalent circular debt, the OGDCL''s receivables on account of crude oil and natural gas supplies have risen to the tune of about Rs 134 billion including late payment surcharge of Rs 14 billion which are stuck in refineries and gas distribution companies. "If serious attention is not paid to this issue, OGDCL may not be able to ensure regular supply of crude oil and natural gas," Qazi says adding that in view of the above position, Finance Division is requested to immediately take urgent measures towards early settlement of OGDCL''s dues.
According to break-up as on April 20, ARL is to pay Rs 35.01 billion, NRL Rs 11.7 billion, PRL Rs 8.8 billion, Parco Rs 6.6 billion, ENAR Rs 204.099 million, Byco Rs 5.5 billion, SNGPL Rs 14.4 billion, SSGCL Rs 31.15 billion, UPL Rs 3.35 billion, FKPCL Rs 550.9 million, Wapda Rs 20.5 million, KESC Rs 606.9 million, PSO Rs 49.020 million and Admore Rs 51.344 million.
OGDCL is also to receive Rs 13.7 billion from oil refineries, oil marketing companies (OMCs) and gas distribution companies on account of late payment surcharge. The amount, OGDCL is to receive on account of late payment surcharge as follows; ARL Rs 2.53 billion, NRL Rs 1.79 billion, PRL Rs 823.5 million, Parco Rs 442.57 million, Byco Rs 1.11 billion, SNGPL Rs 1.73 billion, SSGCL Rs 5.28 billion, UPL Rs 10.4 million, PSO Rs 11.03 million and Admore Rs 11.035 million.
All other entities operating in the energy sector are withholding dues of each other but OGDCL is the end loser and has to pay Rs 162.22 million against the receivables of Rs 132.048 billion on account of crude oil and gas supply. "In past, all measures of government have failed to bail out OGDCL and government should immediately arrange Rs 100 billion to eliminate circular debt issue," sources said adding that OGDCL would not be able to give dividends in future if current position of circular debt continued.
The OGDCL is currently working on five mega development projects including Kunner Pasakhi, Uch-11 and Jhal Magsi which require around $600 million (Rs 51 billion) for execution with a combined estimated capacity to produce 400 mmcfd natural gas, 500 tons per day LPG and 8000 to 9000 barrels per day crude oil. OGDCL has already received bids to develop these development projects OGDCL has also initiated work on Zin field though it has been subjected to delays of over two decades. Zin field has a potential of 6 to 7 trillion cubic gas reserves. Uch-11 gas field will produce 160 mmcfd gas and Kunner Pasakhi-Tando Allahyar integrated project would produce 280 mmcfd gas and 350 tons per day LPG.