Oil and Gas Development Company (OGDC) has proposed to work with Byco Petroleum Pakistan Limited (BPPL) on L/C basis for sale of crude oil. This mechanism is expected to keep the payment secured and current under a given set of commercial terms.
Clarifying a news item appeared in a section of the press, BPPL informed that no legal notice had been sent to Byco as it was already working with the Ministry of Petroleum and OGDCL to find amicable solution to circular debt issue which is the biggest hindrance in smooth working of oil and gas sector in the country.
The OGDC's receivables have over time soared to Rs 165 billion, of which only Rs 5.5 billion is also payable by BPPL and that too because of inter-company circular debt under which equivalent or more amount of BPPL's money is held up with PSO. As per the Circular Debt Mapping Methodology, initiated by the Ministry of Petroleum, BPPL's receivables from PSO to the extent of Rs 2.6 billion out of the total outstanding of Rs 5.8 billion were proposed to be adjusted against OGDC's dues.
BPPL gave its consent and approval to the Ministry of Petroleum's proposal, on June 28, 2012 and passed instructions to National Bank of Pakistan for this adjustment. This way, BPPL has surrendered funds to the extent of Rs 2.6 billion (partial receivables from PSO) in favour of OGDC for adjustment against principal outstanding amount payable by Byco.-PR