OGDC’s receivables rise to Rs170 billion

Squeeze on cash flow puts exploration activities in jeopardy

ISLAMABAD: Receivables of the country’s largest hydrocarbon explorer - Oil and Gas Development Company (OGDC) - have swelled to over Rs170 billion, causing financial crunch and posing a threat to the planned exploration activities to overcome the energy crisis.

“OGDC management has taken up the matter at various forums including Power Holding Private Limited (PHPL), the Ministry of Finance and the Ministry of Water and Power, but its requests and concerns have fallen on deaf ears,” said an OGDC official while talking to The Express Tribune.

“The default on the part of PHPL has put tremendous pressure on OGDC’s cash flow, which is required to finance planned exploration and development projects of national importance.”



The squeeze on the cash flow has, in turn, made it hard for the company to pay its statutory dues such as taxes to the Federal Board of Revenue, dividends to shareholders, royalty to government, etc.

“The matter needs to be addressed immediately at the appropriate level,” the official said.

OGDC is a public listed company and in addition to the government of Pakistan, its shareholders include general public and foreign investors.

During the tenure of previous Pakistan Peoples Party (PPP) government, OGDC’s receivables amounting to Rs82 billion were exchanged with privately placed term finance certificates of the same value issued by PHPL in 2012. The TFCs were backed by sovereign guarantees of the government of Pakistan.

The TFCs carried mark-up of Karachi Inter-bank Offered Rate (Kibor) plus 1% payable every six months and in case of delay, liquidity damages were also applicable.

The certificates had a seven-year tenure including three-year grace period. The payment of six-monthly mark-up started from March 10, 2013. However, only the first three installments up to March 10, 2014 were paid to OGDC.

The outstanding mark-up since September 2014 has accumulated to over Rs25 billion. Apart from this, payment of eight six-monthly installments for the redemption of principal was to start from March 10, 2016.

However, the installments of principal from March 2016 to March 2017 amounting to Rs33 billion have not yet been paid to OGDC.

Furthermore, in line with the Investor Agreement, liquidity damages for late payments amounting to Rs11 billion were to be paid.

Overall, payments due in connection with the TFCs had not been released since September 2014 and the aggregate defaulted amount came in at Rs75 billion, the official said.

Published in The Express Tribune, May 10^th, 2017.

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