Ministry rejects NBP claim of Rs4b for oil payments

Bank demands money for oil purchases on credit from Kuwait.


Our Correspondent May 30, 2012
Ministry rejects NBP claim of Rs4b for oil payments

ISLAMABAD: The Ministry of Finance has blasted the National Bank of Pakistan (NBP) for claiming Rs4.14 billion from the government on account of oil import payments to Kuwait.

Kuwait is the only country which supplies oil to Pakistan on two-month credit, an arrangement put in place during the 2008 financial crisis. Other Middle Eastern countries, including Saudi Arabia, export oil on credit for 30 days.

According to sources, under the existing mechanism, PSO can defer payments for one month while credit facility for another month is availed by the government. PSO pays $300 to $350 million to the government by the end of every month and the amount is deposited in accounts of NBP for one more month.

In this cycle, NBP keeps $300 to $350 million of the government in its accounts for the whole year, but it is interesting that the bank is now claiming a huge amount totalling Rs4.14 billion. Rather, it should have paid interest to the government for keeping its money for the whole year.

When contacted, a senior NBP official told The Express Tribune that “NBP has not claimed any such amount from the government in any account. Moreover, your other queries primarily pertain to director general of oil rather than NBP.”

To resolve the issue, officials of the finance ministry held a meeting with representatives of NBP last week, a senior official of the Ministry of Petroleum and Natural Resources said. Officials of the petroleum ministry also attended the meeting.

The official said the representatives of the finance and petroleum ministries were surprised that the bank had claimed such a huge amount in different heads despite keeping millions of dollars of the government in its accounts.

Finance ministry officials termed the matter a “scandal”. “Everyone in the meeting was caught unawares by claims of NBP, which demanded a big amount rather than paying mark-up to the government,” the official added.

However, the NBP representatives could not come up with satisfactory answers to questions from the finance ministry, which asked them to refrain from making such claims in future.

PSO imports three million tons of diesel a year from Kuwait. Total diesel consumption of the country is 6.8 to 6.9 million tons per annum, of which domestic refineries produce 3.2 to 3.4 million tons. The rest is imported. PSO also imports one million tons of furnace oil per annum on 30-day credit.

In the current scenario where circular debt has plagued the entire energy chain, oil imports from Kuwait on deferred payments definitely help the country.

Last week, PSO’s receivables from its clients, particularly power companies, crossed Rs209 billion. PSO also owes around Rs95 billion to international fuel suppliers, including Kuwait Petroleum Corporation. Total payables of the oil marketing giant to domestic and world fuel suppliers stand at Rs180.82 billion.

Published in The Express Tribune, May 30th, 2012.

 

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