Cabinet panel puts SNGPL, SSGC IFRS relief on hold

The Cabinet Committee on State-Owned Enterprises (CCoSOEs) on Thursday declined to immediately grant accounting relief sought by Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company (SSGC), directing the Petroleum Division to revise its proposal after the two state-owned utilities warned that the absence of exemptions from international accounting standards could leave them vulnerable to being declared insolvent.

The committee, chaired by Finance Minister Muhammad Aurangzeb, asked the Petroleum Division to hold further consultations with the Ministries of Finance and Law and Justice before resubmitting the proposal.

The request sought exemptions for selected energy-sector entities from the application of International Financial Reporting Standards (IFRS) 4 and IFRS 9, citing the financial impact of mounting circular debt.

According to a statement issued by the Ministry of Finance, the meeting was attended by federal ministers, secretaries and senior officials, who reviewed a range of governance and policy matters relating to state-owned enterprises (SOEs).

The committee noted that SSGC and SNGPL had argued that failure to secure the requested exemptions could expose the companies to the risk of being declared insolvent because of the accounting treatment of circular debt.

Rather than approving the request, the committee instructed the Petroleum Division to revisit the proposal in consultation with the Finance Ministry and the Ministry of Law and Justice before placing it again for consideration.

The statement said the Petroleum Division had sought exemptions from IFRS 4 and IFRS 9 for selected state-owned entities operating in the energy sector.