ISLAMABAD:
The Cabinet Committee on State-Owned Enterprises (CCoSOEs) on Thursday declined to immediately grant accounting relief requested by Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company (SSGC) and ordered the Petroleum Division to review its proposal after the two state-owned utilities warned that the absence of exemptions from international standards could leave them insolvent.
The committee, headed by Finance Minister Muhammad Aurangzeb, asked the Petroleum Division to hold further consultations with the finance and law and justice ministries before resubmitting the proposal.
The request sought exemptions for selected entities in the energy sector from the application of International Financial Reporting Standards (IFRS) 4 and IFRS 9, citing the financial consequences of increasing circular debt.
According to a statement issued by the finance ministry, the meeting was attended by federal ministers, secretaries and senior officials who reviewed a range of governance and policy issues 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 due to the accounting treatment of circular debt.
Instead of approving the request, the committee instructed the Petroleum Department to revise the proposal in consultation with the Ministry of Finance and the Ministry of Law and Justice, before it was again submitted 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.
