KE and PSML have disputed Late Payment Surcharge (LPS) on their respective balances due to which management has decided to recognise LPS on a receipt basis from the aforesaid entities effective from 01 July, 2012
KARACHI: Sui Southern Gas Company (SSGC) has claimed in its financial statement that the trade debts include receivables of Rs 32,888 million (2018: Rs 31,948 million) and Rs 23,661 million (2018: Rs.22,924 million) from K-Electric Limited (KE) and Pakistan Steel Mills Corporation (Private) Limited (PSML) respectively.
The company said, “significant portion of such receivables include overdue amounts, which have been considered good by management and classified as current assets in the unconsolidated financial statements.”
Further, KE and PSML have disputed Late Payment Surcharge (LPS) on their respective balances due to which management has decided to recognise LPS on a receipt basis from the aforesaid entities effective from 01 July, 2012.
Due to the adverse operational and financial conditions of PSML, disputes by KE and PSML with the Company on LPS, and large accumulation of their respective overdue amounts, the company was unable to determine the extent to which the total amounts due from KE and PSML were likely to be recovered and the timeframe over which such recovery will be made.
The unconsolidated financial statements of SSGC further claimed that interest accrued includes interest receivable of Rs 7,547 million and Rs 3,741 million from Sui Northern Gas Pipeline Limited (SNGPL) and Water and Power Development Authority (WAPDA) respectively.
These have been accounted for in line with Company’s policy of charging LPS on overdue amounts, but have not been acknowledged by the counter-party. Due to dispute with WAPDA, and large accumulation of their respective overdue amounts of interest, the SSGC was unable to determine the extent to which the interest accrued amounts due from SNGPL and WAPDA are likely to be recovered and the timeframe over which such recovery will be made.
On 30 April, 2018, the International Court of Arbitration decided against the Company in the case with Habibullah Coastal Private Company Limited (HCPCL) and imposed liquidated damages amounting to Rs 4,158 million. Prior to the decision, the Economic Coordination Committee (ECC) through its meeting held on 07 February, 2018 had proposed waiver of liquidated damages and directed Ministry of Energy – Petroleum Division to work out modalities in consultation with all stakeholders.
Based on that decision, management has recognised a receivable of Rs 4,158 million (2018: Rs 3,788 million) from HCPCL as disclosed to these unconsolidated financial statements.
However, to date, no agreement has been finalized between the relevant stakeholders. ln the absence of the agreement, there is no contractual right to receive cash or financial asset from HCPCL and the requirements of IFRS 9 ‘Financial lnstruments’ are not met. Had management not recognised this receivable, the loss before tax would have increased by Rs 4,158 million (2018: Rs 3,788 million) and net assets would have reduced by Rs 2,952 million (2018: Rs 2,652 million).
The financial statements said that describes the reasons why the Company has staggered the effect of Sindh High Court decision over a period of five financial years from 2017 to 2O2l based on the permission received from the ECC, Securities and Exchange Commission of Pakistan (SECP) and the OGRA.
The financial statements described that the Company has reversed the late payment surcharge (LPS) expense of Rs 26,222 million on delayed payables pertaining to gas supplied by Government Controlled E & P Companies i.e. Oil and Gas Development Company Limited (OGDCL), Pakistan Petroleum Limited (PPL) and Government Holding (Private) Limited (GHPL) with effect from 01 July, 2012 to June 30, 2016 and not recorded LPS expense for the year ended June 30, 2017, 30 June, 2018 and 30 June, 2019 amounting to Rs 7,569 million, Rs 7,477 million and Rs 10,525 million respectively.
The Annual General Meeting of the Company will be held on Saturday, 10 August, 2021 at 11:00am at SSGC Head Office, Karachi through video link facility.